Preamble

The House met at a Quarter before Three of the Clock, Mr. SPEAKER in the Chair.

PRIVATE BUSINESS.

Ascot District Gas and Electricity Bill [Lords] (King's Consent signified),

Bill read the Third time, and passed, with Amendments.

Middlesex County Council Bill [Lords],

Read the Third time, and passed, with Amendments.

Falmouth Corporation Water Bill [Lords],

As amended, considered; Amendments made; Bill to be read the Third time.

Walsall Corporation Bill [Lords],

As amended, considered; Amendments made; Bill to be read the Third time.

Oral Answers to Questions — MINISTRY OF LABOUR (OVERTIME).

Mr. DAY: 1.
asked the Minister of Labour the average weekly number of officers of her Department engaged at Employment Exchanges or other Departments connected with the Ministry who have worked overtime during the three months ended to the last convenient date; and the total number of such hours of overtime worked in this period?

The MINISTER of LABOUR (Miss Bondfiield): During the period 1st March to 2nd June, 1930, both dates inclusive, there were on the average 17,849 officers belonging to grades to which payment for overtime is made, and of these an average of 3,219 worked a total of 203,569 hours, or an average of rather less than five hours each per week.

Mr. DAY: Will my right hon. Friend consider consulting with heads of other Government Departments, where employés are under notice, to see if work can be found for some of them?

Miss BONDFIELD: That matter is always under consideration.

Oral Answers to Questions — WASHINGTON HOURS CONVENTION.

Sir KINGSLEY WOOD: 2.
asked the Minister of Labour the reasons why the representative of the British Government at the recent meeting of the International Labour Organisation at Geneva abstained from voting on the suggested revision of the Eight Hours' Convention?

Miss BONDFIELD: The Government took the view that until this country had enacted legislation upon this subject, it was in no position either to support or oppose revision.

Oral Answers to Questions — UNEMPLOYMENT.

PIT MOUNDS (LEVELLING).

Mr. MANDER: 3.
asked the Minister of Labour if the Government are now in a position to offer terms to the Association of Midland Local Authorities which will enable them to carry through their plans for levelling pit mounds and thus provide immediate work for a considerable number of the unemployed for a number of years?

Miss BONDFIELD: The new conditions and terms of grant have been communicated to all local authorities, including those who constitute the Association referred to. I hope that these terms will enable the authorities concerned to carry out some, if not all, of their proposals.

Mr. MANDER: Is the right hon. Lady aware that all that these local authorities are asking is to be allowed to raise their share of the finance by a short-term loan, for they cannot possibly put it on the rates?

Miss BONDFIELD: That is another point.

Lieut.-Colonel Sir A. LAMBERT WARD: Is there any merit in levelling these pit mounds other than to provide work?

Miss BONDFIELD: Yes, the work gives valuable sites for housing.

STATISTICS.

Sir ARTHUR STEEL-MAITLAND: 4.
asked the Minister of Labour what is the increase in the number of unemployed on the live register at the present time which it is estimated is due to the changes introduced by the recent Unemployment Insurance Act?

Major NATHAN: 6.
asked the Minister of Labour if she will give an estimate of the number of persons who have been added to the unemployment registers in consequence of the Unemployment Insurance Act, 1930?

Miss BONDFIELD: Such information as is available indicates that the number is not materially different from that given in reply to the hon. Member for Horncastle (Mr. Haslam) on 22nd May, namely, 60,000.

IRON AND STEEL INDUSTRY (CLEVELAND).

Mr. MANSFIELD: 7.
asked the Minister of Labour if her attention has been drawn to the increase of unemployment in Cleveland arising from the depressed state of the iron and steel industry; and what action her Department proposes to take with a view to trying to improve the trade in this industry?

Miss BONDFIELD: I am aware that unemployment in the iron and steel industry has increased in recent months. In reply to the second part of the question, this is not a matter for my Department, and I would refer my hon. Friend to the reply given by the Prime Minister on the 1st instant to the hon. and gallant Gentleman, the Member for North Midlothian (Major Colville).

MECHANISATION.

Mr. MORLEY: 8.
asked the Minister of Labour if she will set up a committee to inquire and report upon the effect of the introduction of machinery in causing unemployment in recent years and to make recommendations to deal with unemployment caused by this agency?

Miss BONDFIELD: As my right hon. Friend the Chancellor of the Exchequer informed the hon. Member for Walsall (Mr. McShane) on the 23rd January last, all factors affecting the volume of employment are under constant examination by the Departments concerned and in
other ways. I do not think that any good purpose would be served by setting up a special committee at the present time.

Mr. McSHANE: Is there any hope of this House getting any reports whatever from the committees that are dealing with subjects of this nature? Surely that is a reasonable question to ask. Can we get any information at all on this subject to enable us to form a judgment upon it?

RELIEF SCHEMES, PLYMOUTH.

Mr. HORE-BELISHA: 9.
asked the Minister of Labour the number and nature of the relief schemes submitted to the Unemployment Grants Committee and the number approved, respectively, by the city of Plymouth during the last three years; the estimated cost of the schemes; and the number of persons estimated to secure employment in respect of each scheme?

Miss BONDFIELD: During the two years ended the 31st May, 1929, no schemes of work for the relief of unemployment were submitted to the Unemployment Grants Committee by the Plymouth Town Council. Since 1st June, 1929, the council have submitted seven schemes, of which four have been approved, of an estimated value of £184,439 and providing 4,110 man-months of employment. I am circulating particulars of the approved schemes.

Following are the particulars:


Nature of Scheme.
Estimated total cost.
Estimated employment: Man-months.



£



Water Supply
82,000
884


Parks
92,639
2,880


Roads
7,500
189


Municipal Aerodrome
2,300
157

AGED WORKERS (BENEFIT).

Mr. MATTERS: 12.
asked the Minister of Labour if arrangements can be made to continue the payment of unemployment insurance benefit in those special cases where her Department declares the insured person to be over 65 years of age and the Ministry of Health refuses or withholds payment of the old age pension on the ground that no proof of pensionable age is forthcoming through
inability of the claimant to produce the customary certificate of registration of birth?

Miss BONDFIELD: Any question whether a person may continue to receive unemployment benefit must be determined by the statutory authorities. A provisional payment of ten shillings a week is made in cases in which a claimant is clearly entitled either to unemployment benefit or to an old age pension, according to whether he is under or over 65, but where his precise age is in doubt.

Mr. MATTERS: Can the right hon. Lady say then why, in certain cases which I could bring to her notice, payment of the sum which she mentioned is withheld for weeks?

Miss BONDFIELD: It may be that some other question is involved than the question of age in such cases.

Mr. KELLY: What is the basis upon which the officers of the Department come to the conclusion that an applicant is 65 years of age if there is no certificate?

Miss BONDFIELD: An applicant who is in receipt of unemployment benefit may say he is 65 years of age, and there may be some difficulty in satisfying the Ministry of Health officers that he is 65, but during that time if this arrangement were not in force he would fall between two stools.

Viscountess ASTOR: Did not the Government promise old age pensions to all necessitous widows?

Mr. MATTERS: Is it possible to make some arrangements with the Ministry of Health whereby unfortunate individuals in these circumstances are given some measure of benefit?

Miss BONDFIELD: If the hon. Member will put forward individual cases, they will be taken up.

ALIENS.

Mr. CHARLES WILLIAMS: 13.
asked the Minister of Labour how many aliens were permitted to enter this country during last June for the purpose of taking up clerical employment?

Miss BONDFIELD: The number of aliens admitted to this country in June,
1930, for clerical occupations of all kinds, including those admitted as students, visitors, etc., but subsequently permitted to accept such employment, was 84. Most of these were young persons occupying supernumerary posts for limited periods, not usually exceeding 12 months, in order to obtain some knowledge of the English language and British business methods.

Mr. WILLIAMS: What proportion of the 84 remain here permanently?

Miss BONDFIELD: I should say none.

Mr. DOUGLAS HACKING: 14.
asked the Minister of Labour the number of permits issued by her since June, 1929, to enable Russian nationals to obtain employment in this country?

Miss BONDFIELD: I am having the information extracted, and will communicate the result to the right hon. Member as soon as possible.

EMPLOYMENT EXCHANGE, STALYBRIDGE.

Mr. LAWRIE: 15.
asked the Minister of Labour if she is aware of the nature of the accommodation provided for the Stalybridge Employment Exchange; and whether it is proposed to provide more suitable premises?

Miss BONDFIELD: I am aware of the unsatisfactory accommodation provided for the Employment Exchange at Stalybridge, and stops have been taken with a view to the provision of a more suitable building.

BENEFIT DISALLOWED.

Mr. L'ESTRANGE MALONE: 17 and 18.
asked the Minister of Labour (1) the number of claims for benefit made at the Northampton Employment Exchange which were disallowed on the ground that the applicants were not normally engaged in insurable employment in the periods 31st March to 30th June in 1928, 1929 and 1930, respectively; and
(2) the number of claims for benefit made at the Northampton Employment Exchange which were disallowed on the ground that the applicants were not genuinely seeking work in the periods 31st March to 30th June in 1928 and 1929, respectively?

Miss BONDFIELD: As the reply includes a table of figures, I will circulate a statement in the OFFICIAL REPORT.

Mr. MALONE: Will my right hon. Friend institute an inquiry as soon as possible into the working of the Act in this respect?

Claims for Benefit disallotoed on certain grounds in the Northampton Area.


Period.
Number of claims disallowed on the ground—


Not genuinely seeking work.
Not normally insurable and will not normally seek to obtain a livelihood by means of insurable employment.


19th April* to 11th June, 1928
…
25
10


11th March to 10th June, 1929
…
174
11


13th March to 9th June, 1930
…
—
69†


*Corresponding figures are not now available for earlier dates.


†Disallowances by the Court of Referees for the Northampton, Daventry and Towcester area. The other figures in the Table relate to claims made at Northampton Exchange.

Mr. STEPHEN: 21.
asked the Minister of Labour the number of claims to unemployment benefit which have been rejected on the ground of not normally in insurable employment from the coming into operation of the new Act to the latest available date, and the same figures for the corresponding part of last year, disqualified on the not genuinely seeking work disqualification?

Miss BONDFIELD: During the period 13th March to 9th June, 1930, out of 3,003,371 claims made 68,716 were disallowed by courts of referees in Great Britain on the ground that the applicants were not normally insurable and will not normally seek to obtain a livelihood by means of insurable employment. During the period 11th March to 10th June, 1929, out of 2,249,065 claims made 75,078 were disallowed on the ground "not genuinely seeking work."

Mr. STEPHEN: Are we to take it, then, that the "not normally insurable" condition is having practically the same effect as the "not genuinely seeking work" condition, seeing that the figures are so similar?

Miss BONDFIELD: No, Sir, you may not take it to be so.

Sir A. STEEL-MAITLAND: Have a number who were previously disqualified

Miss BONDFIELD: I will institute an inquiry as soon as possible, but I do not think that it is possible to do it now because the relevant facts are not available.

Following is the statement:

as "not genuinely seeking work" been disqualified as "not normally insurable" under the present interpretation?

Miss BONDFIELD: No, I think they are a different set of people. I think a great many of these people are people who in no circumstances would have received benefit.

Mr. BUCHANAN: Will the right hon. Lady say why the percentage of refusals is practically the same in the one case as in the other?

Miss BONDFIELD: The proportion is very different.

Mr. STEPHEN: 22.
asked the Minister of Labour if she is aware that applicants have been refused unemployment benefit on the grounds that they were not normally in insurable employment because they had failed to maintain registration previous to March of this year; and whether she can state what umpire's ruling or statutory condition or regulation lays down registration as necessary?

Miss BONDFIELD: I am not aware that any claimants have been refused benefit under the "not normally" condition solely because of their failure to maintain registration for employment. The umpire has ruled that registration is a factor to be considered in determining whether the condition is satisfied, but
claimants who have not maintained registration have been held in some cases to satisfy the condition, while others who have registered have been held not to satisfy the condition.

Mr. STEPHEN: Will the right hon. Lady make it perfectly plain to the courts of referees that this is the case, as it has been my experience that registration has been regarded as a necessary factor for benefit.

Miss BONDFIELD: I always refer the umpire's decisions to courts of referees.

Mr. STEPHEN: Will the right hon. Lady again send the umpire's ruling to the court of referes?

Miss BONDFIELD: Yes, courts of referees are specially supplied with every umpire's decision.

Mr. MACLEAN: May I ask—

Mr. SPEAKER: There are a good many other questions on the Paper.

Mr. MACLEAN: On a point of Order! This is a matter of very serious importance. A large number of courts of referees in the West of Scotland are acting on the assumption that where the decision of the court is unanimous the applicant has no right to appeal to the umpire. That is the point which ought to be borne in mind.

Mr. SPEAKER: That is not a point of Order.

Mr. MACLEAN: It is a point of hardship, though.

COURTS OF REFEREES, GLASGOW.

Mr. BUCHANAN: 19.
asked the Minister of Labour if she proposes making any changes in the present chairmen of courts of referees, or deputy chairmen, in the Glasgow area; and if she will state the proposed changes, if any?

Miss BONDFIELD: Steps are being taken to fill one vacancy for a chairman and to appoint six reserve chairmen in place of the deputy-chairmen who have continued to act pending these appointments.

Mr. BUCHANAN: Can the right hon. Lady say when an announcement can be made about the reserve chairmen and the one chairman she has appointed?

Miss BONDFIELD: I hope the matter may be settled very soon.

Viscountess ASTOR: Does the right hon. Lady consider the question of appointing a woman if there is one suitable?

Miss BONDFIELD: I do.

ADMINISTRATION, SCOTLAND.

Mr. BUCHANAN: 20.
asked the Minister of Labour if she proposes to make any changes in administration of the present Unemployment Insurance Act arising from the statements made by the deputation which met the Under-Secretary to the Ministry some time ago in Glasgow; and, if so, what are the alterations?

Miss BONDFIELD: The primary object of the meeting in Glasgow arranged by my hon. Friend the Parliamentary Secretary was to consider what steps could be taken to improve the attendances of insured contributors' representatives summoned to attend as members of courts of referees. I have certain proposals under consideration in this connection.

Mr. BUCHANAN: Is the right hon Lady aware that that was not the primary object, and that she has been wrongly informed? The primary object was to secure an inquiry into the administration of the Act in the West of Scotland. Has she taken any steps to deal with the various complaints brought before the inquiry?

Miss BONDFIELD: Yes, I have taken effective steps, and I am glad to say that I have had the hearty co-operation and help of Scottish representatives.

Sir A. STEEL-MAITLAND: Will the right hon. Lady publish the result of any inquiry into the administration of the present Unemployment Insurance Act and extend the scope of the inquiry?

Oral Answers to Questions — OUT-WORKERS, EAST LONDON.

Major NATHAN: 5.
asked the Minister of Labour whether she is now in a position to make a statement regarding the sweated wages and unhealthy conditions of labour among many out-workers in East London, and particularly in the boot and shoe industry?

Miss BONDFIELD: The inquiries by my Department with regard to wages in
the boot and shoe trade in East London are still in progress, and will not be completed for some little time. The question of unhealthy conditions of labour is one for the Home Office.

Mr. MALONE: Is the Minister satisfied that adequate inspection has taken place?

Miss BONDFIELD: That is one of the points which are being investigated.

Oral Answers to Questions — CLOTHING TRADE (GOVERNMENT CONTRACTS).

Mr. KELLY: 11.
asked the Minister of Labour whether the various Departments have been informed that one of the conditions of employment in the clothing trade is an annual holiday with pay; and whether contracts for clothing are given under the condition that this holiday operates for the employés of such contractors?

Miss BONDFIELD: I am informed that, in accordance with an understanding recently reached between organisations of employers and workers in the clothing trades, the employers' organizations

The only available statistical information on this subject consists of the figures compiled by the International Labour Office with regard to the cost of food, fuel, Tight and soap. The international Labour Office have published the figures given in the following Table relating to retail prices, in January, 1930, of these commodities, taken in quantities representative of the average international working-class consumption of an adult male:—


Index Numbers of the cost of Food, Fuel, Light and Soap in France, Germany and Great Britain in January, 1930 (Great Britain—100).


Country.
Number of towns in respect of which price data were obtained.
Index numbers of comparative cost.


Food.
Food, fuel light and soap.


France
…
…
…
…
…
4
95
97


Germany
…
…
…
…
…
6
106
106


Great Britain
…
…
…
…
7
100
100


These comparisons are subject to important reservations, as to which reference should be made to the "International Labour Review" for April, 1930.


There are no comparable statistics of retail prices of other articles, including clothing, entering into working-class family consumption, or of the cost of housing accommodation.

Oral Answers to Questions — LICENSING HOURS (EXTENSIONS).

Mr. DAY: 23.
asked the Secretary of State for the Home Department whether, in view of the fact that special licensing permits for the extension of hours of

have issued to their members a recommendation for the payment of an annual holiday allowance. As regards the latter part of the question, responsibility for the conditions of Government contracts does not rest with me, but with the various contracting departments.

Mr. KELLY: Has the right hon. Lady informed the other Departments that this is now a part of the conditions of employment, and therefore comes under the fair wages clauses?

Miss BONDFIELD: I will look into that point.

Oral Answers to Questions — COST OF LIVING.

Mr. McSHANE: 16.
asked the Minister of Labour the relative cost of living in France, Germany and Great Britain, respectively?

Miss BONDFIELD: As the reply is rather long and contains a table of figures, I Propose, with my hon. Friend's permission, to circulate it in the OFFICIAL REPORT.

Following is the reply:

licensing are granted at the discretion of the police in the Metropolitan area, he will consider the introduction of legislation which will have as its object the granting of these permits by the licensing justices?

The SECRETARY of STATE for the HOME DEPARTMENT (Mr. Clynes): This is one of the matters which are now under the consideration of the Royal Commission on Licensing, and I am unable to make any statement on it at present.

Mr. DAY: Is my right hon. Friend satisfied that the present position is satisfactory?

Mr. CLYNES: I am satisfied that it would be inadvisable to isolate the single branch of the licensing law from the rest.

Viscountess ASTOR: Does the right hon. Gentleman not think that the Royal Commission on Licensing was just a way of putting off al difficult question?

Mr. CLYNES: It is the very opposite.

Oral Answers to Questions — MOUNTAIN PONIES, WALES.

Mr. FREEMAN: 24.
asked the Home Secretary whether his attention has been called to the death by starvation, exposure, and neglect of Welsh mountain ponies owing to the drop in their market value; whether he is aware that, owing to no system of registering or branding existing, the police are unable to establish ownership or prosecute the offenders; that during last winter 34 such ponies were found dead in two counties and many others so weak that they had to be shot; and whether he will introduce legislation to deal with the matter?

Mr. CLYNES: I have caused inquiry to be made as regards the counties of Radnor and Brecon, to which I understand the question mainly refers, and I am informed that 24 ponies are known to the police to have died in the mountain areas during last winter and spring. I understand that it is the general practice of farmers to mark their stock and bring them in from the mountains in the winter. Those which are unmarked and left on the hills belong mainly to private individuals. In the circumstances, I doubt if any further legislation is required and, on the information before me, I do not see my way to propose any.

Mr. FREEMAN: Is it a fact that sometimes the ears of these ponies, on
which are the private marks, are cut off so that the police cannot trace the owners and institute prosecutions?

Mr. CLYNES: I can only say that prosecutions for neglect have been instituted and there have been convictions. I shall be glad to have information of any individual cases from my hon. Friends.

Oral Answers to Questions — SWEEPSTAKES AND WHIST DRIVES.

Mr. DAY: 25.
asked the Home Secretary whether, in view of the uncertainty existing with regard to the present laws on the legality of sweepstakes, crossword puzzles, whist drives, and other forms of such recreation, he will consider the appointment of a committee which will have as its object the making of suggestions as to how the existing laws can be clarified and brought into uniformity?

Mr. CLYNES: As at present advised, I do not think the course suggested is necessary.

Mr. DAY: Does not the right hon. Gentleman think that something should be done to allay the present uncertainty?

Mr. CLYNES: No. I think that whatever is done there will be some dissatisfaction.

Oral Answers to Questions — WORKMEN'S COMPENSATION.

Mr. MORLEY: 27.
asked the Home Secretary what further progress has been made in scheduling the disease of fibrosis of the lungs under the Workmen's Compensation Act?

Mr. CLYNES: I would refer my hon. Friend to my reply to a similar question on the 10th April and to my letter to him of the same date in which I explained the position very fully. I regret I have nothing further to add at present.

Mr. MORLEY: Has there been no further progress since that date?

Mr. CLYNES: Yes, the committee to which I refer and which was appointed by the research board, has continued its work.

Mr. TINKER: 36.
asked the Home Secretary if his attention has been drawn to a number of colliery companies that
have failed and gone into liquidation and that, consequent upon this, persons who are entitled to payments under the Workmen's Compensation Act cannot get their money; and will he take steps to amend the Workmen's Compensation Act so as to make the insurance compulsory?

Mr. CLYNES: I am well aware that workmen have suffered grave hardship in the way mentioned, and the Government has the question of further legislation—which would necessarily be of a far-reaching character—under serious consideration. I am afraid, however, that I am not in a position at present to make any statement.

Oral Answers to Questions — DISTRIBUTIVE TRADES (HOURS).

Mr. MORLEY: 28.
asked the Home Secretary when he proposes to introduce a, Bill to reduce the hours of labour for workers in the distributive trades?

Mr. CLYNES: I would remind my hon. Friend that a Select Committee was appointed by this House in May last to consider and report upon proposals for limiting the hours of work of shop assistants and improving the conditions of their employment. It will obviously be necessary to await the findings of this Committee before the question of legislation is considered.

Mr. MORLEY: In view of the fact that there are more than 100,000 people unemployed in the distributive trades at the present time would it not be well to hasten the report of this committee in order that by reduction of hours we might employ some of these people?

Mr. CLYNES: It may be said that the Government have attempted to hasten it.

Mr. MANDER: Could not this matter be dealt with apart from legislation under the Trade Boards Act?

Mr. CLYNES: I think not on any large scale.

Oral Answers to Questions — SUBVERSIVE PROPAGANDA.

Sir K. WOOD: 29.
asked the Home Secretary whether he can state what progress has been made in the investigation of certain alleged subversive publications in this country and whether any action has yet been taken?

Mr. CLYNES: I presume that, the right hon. Member has in mind a certain publication about which he has asked previous questions. He will have observed that proceedings have been taken which resulted on Tuesday in the printer of this paper being fined and three other persons, who are responsible for its publication, being sent to prison for contempt of court.

Sir K. WOOD: But why did not the right hon. Gentleman take steps with reference to the issue of 1st May? That is now a good many weeks ago. The answer refers to an entirely different matter.

Mr. CLYNES: All the necessary and proper steps under legal advice have been taken.

Sir K. WOOD: Are all those cases being referred to the Director of Public Prosecutions?

Mr. CLYNES: I would not say that, but they are when it is thought necessary.

Mr. MARJORIBANKS: Are they considered first by the Cabinet?

Mr. CLYNES: No.

Oral Answers to Questions — JUVENILE OFFENDER (SENTENCE, CHELMSFORD).

Mr. LOVAT-FRASER: 30.
asked the Home Secretary if he is aware that in a recent case at Chelmsford a, boy of eight years was placed on probation and at the same time sentenced to receive four strokes of the birch; and whether he will take steps to prevent probation and birching being combined in dealing with child offenders?

Mr. CLYNES: I have made inquiry, and I am informed that the boy was before the court for two separate offences to which the boy's father pleaded guilty in his behalf. After consideration of the circumstances, the Justices decided that it was necessary for them to punish the boy for the one offence and to place him on probation for the other. The Justices appear to have acted within their discretion.

Mr. W. J. BROWN: Shame!

Mr. SPEAKER: "Shame" is not a Parliamentary expression.

Mr. BROWN: I do not know whether it is a Parliamentary expression—

HON. MEMBERS: Order! Name!

Mr. SPEAKER: Does the hon. Member rise to a point of Order?

Mr. BROWN: I do not know whether this is a point of Order, Sir—

HON. MEMBERS: Sit down when the Speaker stands up?

Mr. McSHANE: On a point of Order.

Mr. SPEAKER: I cannot hear more than one point of Order.

Mr. BROWN: I want to ask for your guidance. I do not know whether it is a point of Order or not, but I do assert that it is monstrous outrage—[HON. MEMBERS: "Order!"]—to punish a boy of that age—[HON. MEMBERS: "Order!"]—and I say to the Home Secretary—[HON. Members: "Name!"]—

Mr. SPEAKER: I hope the hon. Member will not continue that kind of behaviour.

Mr. BROWN: May I raise this point? I desire to make this statement to you, that, whether it is in a Parliamentary sense in order or not, it is an outrage for a Home Secretary to justify the infliction of corporal punishment on a child—

HON. MEMBERS: Order!

Mr. SPEAKER: If the hon. Member wishes to bring pressure to bear upon the Home Secretary, he knows that there are other means of doing it.

An HON. MEMBER: He wants to be named.

Mr. BROWN: I say it is an outrage.

Mr. CLYNES: What the hon. Member has just said shows that he is under a complete misapprehension as to the terms of my answer. I have not said a word to justify this decision of the magistrates.

Mr. BROWN: Are you doing anything to stop this outrage?

Mr. CLYNES: I have in mind the intention of conveying my views in the proper form to the justices.

Mr. LOVAT-FRASER: May I now ask my supplementary question?

Mr. CLYNES: Steps have been taken repeatedly to draw the attention of the justices to the matter.

Mr. BROWN: Will you stop this practice?

Mr. SPEAKER: Mr. Lovat-Fraser—

Mr. LOVAT-FRASER: May I ask if steps are taken to bring to the notice of the justices the impropriety of this practice—

Mr. SPEAKER: I called upon the hon. Member to ask Question No. 31.

Mr. BROWN: Before we reach Question No. 31—[HON. MEMBERS: "Name!"I—may I ask the Home Secretary whether his attention—

Mr. SPEAKER: The Home Secretary gave a very complete answer.

Mr. BROWN: No, Sir, with great respect.

Mr. BECKETT: May I ask, in view of the anxiety of a number of Members to know whether this sentence has been carried out, if we might not be allowed to ask that one supplementary question?

Mr. SPEAKER: There have been a number of supplementaries already.

At the end of Questions:

Mr. BROWN: On a point of Order. I tried to catch your eye, Mr. Speaker, before the exchange took place between the Leader of the Opposition and the Prime Minister on the subject of the business for next week. My point of Order is this, that earlier to-day I directed a question to the Home Secretary in regard to a sentence of birching upon a child of eight. There was a supplementary question directed to ascertaining whether that sentence had been carried out, and I understood the Home Secretary to say that that matter must be raised on the Adjournment. I have consulted my friends, and I find that some days at least must elapse before that matter can be raised upon the Adjournment. I desire, therefore, to ask whether the Home Secretary will be good enough to say that, pending the matter being raised on the Adjournment, the sentence shall not be carried out on that child of eight.

Mr. SPEAKER: I cannot say that that is a point of Order.

Mr. CLYNES: As no supplementary question was put raising the point which the hon. Member has now brought before the House, I was not able to give any answer. There was a misunderstanding on another point, which I tried to explain, but on account of the noise that occurred—[Interruption.] I have caused inquiries to be made as to whether the sentence has been executed, and, as a fact, I do not know.

Mr. BROWN: Will the right hon. Gentleman stop the sentence from being executed?

HON. MEMBERS: Will he stop it?

Mr. BROWN: May I, with great respect, press the point that the Home Secretary should stop it?

Mr. CLYNES: I can only say that the Home Secretary is not a court above a court. The justices have the discretion, and they reach decisions according to the merits and facts of the case. I generally presuppose that the men on the spot know most of the facts of the case and—

Mr. ERNEST BROWN: On a point of Order. Are other hon. Members to be allowed to put supplementaries on questions not reached? [HON. MEMBERS: "Hold your tongue!"] The hon. Member has no more right than we have.

Mr. SPEAKER: The hon. Member for Leith (Mr. E. Brown) is quite right. Every hon. Member has the same right as another. The latitude that was given was to clear up a misunderstanding that had apparently arisen owing to the Home Secretary not being able to reply. He has replied, and the question is now closed.

Mr. CLYNES: Will you allow me—

Mr. SPEAKER: The question is now closed.

Mr. W. J. BROWN: On a point of Order. [Interruption.] You may be fed up with it, but it is a very important matter.

Mr. SPEAKER: If the hon. Member really has a point of Order to raise, of course, I will hear it, but he cannot raise any other subject.

Mr. BROWN: I desire, with the utmost respect to you, to keep within the Rules of Order. The point of Order I now wish to raise is this. In your discretion, for which I am obliged, you have allowed me to try to clear up a misunderstanding between myself and the Home Secretary with regard to this matter. The Home Secretary was in process of trying to clear up that misunderstanding when a point of Order was raised from the other side. Your reply to the point of Order was that, the Home Secretary having explained the situation, the incident could now be regarded as closed. I now wish to submit to you that, in point of fact, the Home Secretary has not yet explained that matter, and was in process of doing so when the point of Order was raised by the hon. Member opposite.

Mr. SPEAKER: The Home Secretary gave a very full answer.

Mr. CLYNES: rose—[Interruption.]

Mr. E. BROWN: Order! [HON. MEMBERS: "Shut up.") I have as much right as the hon. Member opposite.

Mr. SPEAKER: There has been quite enough disorder to-day.

Mr. CLYNES: I was about to conclude my sentence by saying that I am now proceeding to get the facts, and, as far as the Home Secretary has any power to act, he will act as he thinks fairly when he is in full possession of the facts.

Oral Answers to Questions — DANCING INSTRUCTION.

Mr. LOVAT-FRASER: 31.
asked the Home Secretary if he is aware that teaching in acrobatic dancing is frequently given to children by unqualified teachers whose ignorance may lead to spinal and other injuries; and whether he will consider the desirability of introducing legislation to require that all dancing teachers training children for public performances shall be registered and have their classes open to inspectors?

Mr. CLYNES: I have no information, on this matter. If the hon. Member will send me any information in his possession I shall be glad to consider it.

Oral Answers to Questions — COLOURED SEAMEN.

Mr. ARTHUR HENDERSON, Junr.: 32.
asked the Home Secretary whether he is aware that coloured seamen born within the allegiance of the Crown are required to register in accordance with the requirements of Article 6 (5) of the Aliens Order, 1923, as amended by the Coloured Alien Seamen Order, 1925; and whether he proposes to take any action in the matter?

Mr. CLYNES: A coloured seaman is not required to register as an alien if he is able to produce satisfactory evidence that he is a British subject, and I aim not aware of any reason for action in the matter.

Mr. HENDERSON: Is the Home Secretary aware that certain coloured seamen who, in consequence of the fact that they were born in British territory, have been domiciled in Cardiff for more than 20 years, have been compelled by the police to register under the Order of 1925?

Mr. CLYNES: I do not think that that has been quite in keeping with the regulations, and I shall be glad to have evidence of any particular case.

Oral Answers to Questions — DANGEROUS DRUGS.

Lieut.-Colonel FREMANTLE: 33.
asked the Home Secretary what steps, if any, have been taken to summon a preliminary conference of countries manufacturing narcotics with a view to limitation of their output, as suggested on behalf of Great Britain at Geneva on 14th May last; and if be will give a list of the countries to be invited to participate in any such conference?

Mr. CLYNES: It has not yet been possible to take any steps to convene the proposed preliminary conference as the preparation work is not yet completed.

Lieut.-Colonel FREMANTLE: Is the Home Secretary aware that the Foreign Secretary said at Geneva in May last that he would be happy to take the initiative to summon such a meeting for the end of July?

Mr. CLYNES: My answer has indicated that the inquiries are not yet sufficiently complete to enable such a meeting to be held.

Lieut.-Colonel FREMANTLE: Would it not be too late to do it now in preparation for the conference in October?

Mr. CLYNES: I will consult my right hon. Friend on that matter.

Sir A. STEEL-MAITLAND: When will the inquiries be completed?

Mr. CLYNES: I could not say. They are not quite in the hands of the Home Office.

Mr. MARLEY: Will the Home Secretary take action against doctors who leave drugs in open cars and fine them when that takes place?

Mr. CLYNES: Steps have been taken in regard to that matter.

Dr. MORRIS-JONES: 34.
asked the Home Secretary whether he is aware that drugs of a poisonous character can be procured from automatic machines outside chemists' establishments in the county of London; and whether, in view of the Poisons and Pharmacy Act, 1908, and the danger involved to the public, he will cause any such vendors to be prosecuted?

Mr. CLYNES: I have seen in the Press the report of a case in which the legality of such sales was raised, and the Judge decided that they involved a breach of Section 3 of the Poisons and Pharmacy Act, 1908. The proceedings for the recovery of a penalty under that Section are of a civil character and are instituted by the Registrar of the Pharmaceutical Society, and I have no power to intervene. I understand the case in question was arranged by the Pharmaceutical Society for the purpose of testing the legality of such sales, and the judgment will, no doubt, be taken note of by those concerned.

Oral Answers to Questions — TRAFFIC REGULATION (POLICE CASUALTIES).

Mr. HACKING: 35.
asked the Home Secretary whether he will state the number of police officers engaged on regulating traffic in the Metropolitan Police area who have been either killed or injured during the past 12 months; and whether all officers engaged upon this duty are compelled to wear white sleeves?

Mr. CLYNES: 171 officers were injured, none fatally. Officers engaged on this duty are required to wear the white gauntlets provided, but it occasionally happens that an officer has to take up traffic duty at short notice without gauntlets.

Mr. HACKING: Will the Home Secretary see that every police constable, in the interests of his own safety and in the interests of motorists, is provided with a pair of white sleeves in case he has to take up this duty at short notice?

Mr. CLYNES: We will consider whether that can be done.

Mr. BECKETT: Has the attention of the Home Department been called to the effect of the reflection from lamps on wet roads in hiding these officers, and is any care taken to see that they are not stationed at such places?

Mr. CLYNES: That is the point on which I require notice, as it is not in any way covered by the question on the Paper.

Oral Answers to Questions — EDUCATION.

STATE SCHOLARSHIPS.

Mr. EDE: 37.
asked the President of the Board of Education how many persons have been refused State scholarships during each of the last three years because the family income was above the limits fixed by the Board?

The PRESIDENT of the BOARD of EDUCATION (Sir Charles Trevelyan): The number of persons eligible for State scholarships who did not apply for grants or who were refused grants, on account of their family income or other resources, was 11 in 1927, 13 in 1928, and 18 in 1929. Two of these, after beginning their University course without grants, subsequently received grants on account of a decrease in the family income.

RELIGIOUS INSTRUCTION.

Mr. EDE: 38.
asked the President of the Board of Education how many secondary schools maintained or aided by local authorities in England and Wales give religious instruction in accordance with the tenets of the Roman Catholic Church, of the Church of England, and of other religious denominations, respectively, the number of such schools where the religious teaching is
on undenominational lines; and the number of children in each of those respective groups of schools?

Sir C. TREVELYAN: As the answer to this question includes a number of figures, I will, with my hon. Friend's permission, circulate it in the OFFICIAL REPORT.

Following is the answer:

The giving of religious instruction in secondary schools maintained by local education authorities is governed by Section 72 of the Education Act, 1921. I have no information as to the extent to which denominational religious instruction is given in such schools in accordance with the provisions of Subsection 3 of that Section.

On 1st January, 1930, there were 535 non-provided schools in England and Wales which were recognised by the Board for purposes of grant and were aided by local education authorities. In the case of 174 of these schools, regulations for denominational religious instruction have been submitted in accordance with paragraph 2 of the Schedule to the Regulations for Secondary Schools under which the Governors may provide denominational instruction upon the written request of parents. The particulars are as follow:


Denominational Instruction.
Number of Schools.
Total number of full-time pupils on 1st October, 1929.


Church of England
95
23,018


Roman Catholic
67
16,795


Wesleyan Methodist
1
238


Church of Wales
1
144


Any denomination (according to the request of the parent).
10
1,893


Total
174
42,088

It may be assumed that in the case of the remaining 381 non-provided schools aided by local education authorities (containing 108,256 pupils) such religious instruction as is given is undenominational in character.

MEDICAL EXAMINATIONS.

Mr. McSHANE: 39.
asked the President of the Board of Education whether he
will institute comparative medical examinations of representative samples of school children of men who have been for some time unemployed and of men belonging to the regularly-employed artisan class?

Sir C. TREVELYAN: Apart from the practical difficulties involved, I doubt whether the investigation suggested would lead to any useful results. I may, however, point out that it is the duty of local education authorities, as part of the ordinary work of the school medical service, to discover whether children are suffering from malnutrition, and that in areas where industrial depression is acute special steps are taken to keep a close watch on the health of the children, and to provide supplementary nourishment in cases of need.

Mr. McSHANE: Would it not be useful to us here in the House to know whether the children of men who have been out of work for a considerable number of years are or are not suffering from the fact that the parents have been living more or less on the borderline of poverty all these years?

Viscountess ASTOR: Is it not true that been 30 and 40 per cent. of the children in our elementary schools are physically defective, while only 7 per cent. of the children from nursery schools are physically defective; and would it not be a good idea to build more nursery schools at once?

Sir C. TREVELYAN: As to the suggestion of my hon. Friend the Member for Walsall (Mr. McShane), I very much doubt whether it would be practicable.

Mr. McSHANE: Is the right hon. Gentleman aware that such a sample was established in Glasgow some years ago, before the War, and that the results then were highly valuable socially?

Sir C. TREVELYAN: If my hon. Friend will give me particulars, I will consider the matter.

NURSERY SCHOOLS.

Miss PICTON-TURBERVILL: 40.
asked asked the President of the Board of Education how many local authorities who did not include nursery schools on their first programme have, since his representations on the subject, done so?

Sir C. TREVELYAN: Most of the local education authorities to whom representations have been made, after the submission of their programmes, with regard to the inclusion of provision for nursery schools, still have the matter under consideration. Two authorities which did not include nursery schools in their original programmes have now submitted proposals.

Miss PICTON-TURBERVILL: Could the right hon. Gentleman give the names of those two authorities?

Sir C. TREVELYAN: I have not got them here.

Viscountess ASTOR: Does the right hon. Gentleman think that a pious hope in a circular to local authorities is of any use?

Oral Answers to Questions — ENTERTAINMENTS (CHILD PERFORMERS).

Mr. LOVAT-FRASER: 41.
asked the President of the Board of Education if he is aware that the supervision of children licensed to sing and dance in cinemas and variety theatres is now entirely in the hands of men; and whether, in view of the fact that the licensed children are almost entirely girls, he will consider the desirability of introducing legislation to make the appointment of women supervisors compulsory?

Sir C. TREVELYAN: I am aware that male officers are generally employed by local education authorities for the enforcement of the law relating to the employment of children in theatrical entertainments, but the actual supervision of the children is usually in the hands of women. The inquiries which I am making into the question of this employment are not yet complete, but, when I have had an opportunity of considering the matter further, I shall be glad to communicate with my hon. Friend.

Oral Answers to Questions — PUBLIC HEALTH.

TUBERCULOSIS, SOUTH SHIELDS.

Mr. EDE: 42.
asked the Minister of Health if he has received a copy of the special report of the medical officer of South Shields on the prevalence of tuberculosis in that county borough; and what action he proposes to take on it?

The MINISTER of HEALTH (Mr. Arthur Greenwood): The answer to the first part of the question is in the affirmative. A medical officer of my Department will be visiting South Shields shortly, with a view to investigating the question of the prevalence of tuberculosis in the borough.

Mr. EDE: Will the evidence collected by this officer be tendered in public, and will interested parties have an opportunity of cross-examining witnesses?

Mr. GREENWOOD: This is not an official inquiry, but I am sure that the medical officer will be glad to consult all who have knowledge of this question.

WATER SUPPLIES.

Mr. EGAN: 43.
asked the Minister of Health if he will recommend to the Unemployment Schemes Committee the national provision of water reservoirs at necessary points throughout the country?

Mr. GREENWOOD: The primary responsibility for schemes of water supply rests with the local authorities concerned, and substantial grants from the Unemployment Grants Committee are already available in aid of approved reservoir schemes promoted by them. As at present advised, I see no necessity for action on the lines suggested by my hon. Friend.

Mr. EGAN: In view of the fact that only large and wealthy authorities can take advantage of that procedure, and that large areas throughout the country are without proper supplies of water, will my right hon. Friend reconsider his decision on this matter?

Mr. GREENWOOD: My hon. Friend is misinformed. Special opportunities are given now to rural areas to obtain water supplies.

Oral Answers to Questions — POOR LAW OFFICIALS, HENDON (PROSECUTION).

Mr. ERNEST WINTERTON: 44.
asked the Minister of Health whether his attention has been drawn to the case at Hendon Police Court on 7th July, when three officers of the Hendon Union Institution were fined for assaulting an unemployed, partially blind seaman named William Arthur Gape; and
whether he proposes to investigate this case with a view to disciplinary action against the officials concerned and the award of compensation to the unemployed seaman in question?

Mr. GREENWOOD: Yes, Sir. The County Council of Middlesex are inquiring into the matter, and I propose to await the result of their inquiry.

Oral Answers to Questions — INDIA.

Mr. BROCKWAY: 45.
asked the Prime Minister whether time will be given before the Recess for a discussion upon the situation in India?

The PRIME MINISTER (Mr. Ramsay MacDonald): I would refer my hon. Friend to the reply which I gave on Monday last in answer to a question by my hon. Friend the Member for Pontypridd (Mr. Mardy Jones).

Mr. BROCKWAY: Have there been no developments since last Monday which now make a debate desirable?

The PRIME MINISTER: No; any developments that have taken place have been in exactly the opposite direction.

Mr. BROCKWAY: In view of the fact, that over 5,000 men and women are now in prison in India, and that the last hopes of a settlement seem to be destroyed, can this House have no opportunity of discussing this matter before we adjourn?

The PRIME MINISTER: I deprecate most strongly any sort of statement that the last hope of a settlement has been destroyed, for, as a matter of fact, it is not true.

Mr. BROCKWAY: May I put this point of Order to you, Mr. Speaker, as to whether there is any means by which back bench Members of this House, in spite of an agreement between the three party Leaders, may have an opportunity of raising questions upon which they feel very deeply?

Mr. SPEAKER: I cannot create new methods. The methods of the ordinary procedure are open to all Members, irrespective of party. I am afraid they must make use of the existing methods.

Mr. BROCKWAY: May I draw your attention to this fact, that, on the last occasion when we wished to raise the question of India in this House, we were compelled to use the Adjournment, and the important question of India was postponed until the last hour of that Adjournment, when the House was practically empty; and may I ask if that is a dignified way of dealing with this matter? [Interruption.]

Mr. SPEAKER: That is a matter of opinion.

Mr. BROCKWAY: I am very sorry, but I cannot possibly be silent, in view of this situation. I speak with very great respect—

Mr. SPEAKER: This is not the time for a demonstration.

Mr. BROCKWAY: I speak with very great respect, but, honestly, the situation in India is now so serious that we should be failing to do our duty if we did not speak our minds on this matter, and, if the Front Bench will not allow us an opportunity to do so, we must take other means of doing it. I say that with very great respect, but we cannot be silent on this matter. [Interruption.]

Mr. SPEAKER: I shall have to name the hon. Member if he will not obey my Ruling.

Mr. BROCKWAY: I speak with very great respect to you, Sir, but the situation is so terribly important that one cannot be silent. I speak with very great respect to you indeed, but it is impossible. The situation between this country and India has reached a crisis, and we should not keep silence on this matter. Our desire has been, as the Secretary of State for India knows, to assist him in reaching a settlement, and we feel that we could make a definite contribution to this problem at this point. [Interruption.]

Mr. SPEAKER: I must name the hon. Member for East Leyton, Mr. Brockway, for disregarding the authority of the Chair.

The PRIME MINISTER: I beg to move,
That Mr. Brockway be suspended from the service of the House.

Question put, "That Mr. Brockway be suspended from the service of the House."

The House divided: Ayes, 260; Noes, 26.

Division No. 436.]
AYES.
[3.31 p.m.


Acland-Troyte, Lieut-Colonel
Chamberlain, Rt. Hon. N. (Edgbaston)
George, Megan Lloyd (Anglesea)


Adamson, Rt. Hon. W. (Fife, West)
Chapman, Sir S.
Gibbins, Joseph


Altchison, Rt. Hon. Craigie M.
Charleton, H. C.
Gibson, C. G. (Pudsey & Otley)


Albery, Irving James
Chater, Daniel
Gillett, George M.


Alexander, Rt. Hon. A. V. (Hillsbro')
Christie, J. A.
Gilmour, Lt.-Col. Rt. Hon. Sir John


Allen, Lt.-Col. Sir William (Armagh)
Church, Major A. G.
Glassey, A. E.


Ammon, Charles George
Clynes, Rt. Hon. John R.
Gossling, A. G.


Arnott, John
Colfox, Major William Philip
Gould, F.


Astor, Viscountess
Compton, Joseph
Graham, Fergus (Cumberland, N.)


Baker, John (Wolverhampton, Bilston)
Courthope, Colonel Sir G. L.
Graham, Rt. Hon. Wm. (Edin., Cent.)


Baldwin, Rt. Hon. Stanley (Bewdley)
Cowan, D. M.
Granville, E.


Balfour, Captain H. H. (I. of Thanet)
Crichton-Stuart, Lord C.
Grattan-Doyle, Sir N.


Balniel, Lord
Crookshank, Capt. H. C.
Gray, Milner


Beamish, Rear-Admiral T. P. H.
Culverwell, C. T. (Bristol, West)
Greenwood, Rt. Hon. A. (Colne)


Bellamy, Albert
Dalton, Hugh
Grenfell, D. R. (Glamorgan)


Benn, Rt. Hon. Wedgwood
Davies, Dr. Vernon
Gretton, Colonel Rt. Hon. John


Bennett, William (Battersea, South)
Davies, Rhys John (Westhoughton)
Hacking, Rt. Hon. Douglas H.


Betterton, Sir Henry B.
Davison, Sir W. H. (Kensington, S.)
Hall, F. (York, W. R., Normanton)


Bondfield, Rt. Hon. Margaret
Day, Harry
Hall, G. H. (Merthyr Tydvil)


Bourne, Captain Robert Croft
Denman, Hon. R. D.
Hamilton, Sir George (Ilford)


Bowyer, Captain Sir George E. W.
Dickson, T.
Hamilton, Mary Agnes (Blackburn)


Boyce, H. L.
Dugdale, Capt. T. L.
Hamilton, Sir R. (Orkney & Zetland)


Broad, Francis Alfred
Dudgeon, Major C. R.
Hammersley, S. S.


Bromfield, William
Duncan, Charles
Harris, Percy A.


Brothers, M.
Ede, James Chuter
Hartshorn, Rt. Hon. Vernon


Brown, Col. D. C. (N'th'l d'., Hexham)
Eden, Captain Anthony
Harvey, Major S. E. (Devon, Totnes)


Brown, Ernest (Leith)
Edmondson, Major A. J.
Henderson, Right Hon. A. (Burnley)


Brown, Brig.-Gen. H. C. (Berks, Newb'y)
Edmunds, J. E.
Henderson, Arthur, Junr. (Cardiff, S.)


Brown, Rt. Hon. J. (South Ayrshire)
Edwards, C. (Monmouth, Bedwellty)
Henderson, W. W. (Middx., Enfield)


Buchan, John
England, Colonel A.
Hennessy, Major Sir G. R. J.


Cadogan, Major Hon. Edward
Erskine, Lord (Somerset, Weston-s. M.)
Herbert, Sir Dennis (Hertford)


Carter, W. (St. Pancras, S. W.)
Falle, Sir Bertram G.
Herriotts, J.


Cautley, Sir Henry S.
Ferguson, Sir John
Hills, Major Rt. Hon. John Waller


Cayzer, Sir C. (Chester, City)
Fremantle, Lieut.-Colonel Francis E.
Hirst, G. H. (York W. R. Wentworth)


Cazalet, Captain Victor A.
Ganzonl, Sir John
Hopkin, Daniel


Chamberlain, Rt. Hn. Sir J. A. (Birm., W.)
Gardner, B. W. (West Ham, Upton)
Howard-Bury, Colonel C. K.


Hudson, James H. (Huddersfield)
Morrison, Robert C. (Tottenham, N.)
Smith, Tom (Pontefract)


Hunter, Dr. Joseph
Mosley, Sir Oswald (Smethwick)
Smith, W. R. (Norwich)


Hurd, Percy A.
Murnin, Hugh
Smith-Carington. Neville W.


Hutchison, Maj.-Gen. Sir R.
Nathan, Major H. L.
Smithers, Waldron


Isaacs, George
Newman, Sir R. H. S. D. L. (Exeter)
Snowden, Rt. Hon. Philip


Jones, F. Llewellyn-(Flint)
Noel-Buxton, Baroness (Norfolk, N.)
Somerville, A. A. (Windsor)


Jones, Rt. Hon. Leif (Camborne)
Oldfield, J. R.
Southby, Commander A. R. J.


Jones, Morgan (Caerphilly)
Oliver, P. M. (Man., Blackley)
Stanley, Lord (Fylde)


Kennedy, Thomas
Oman, Sir Charles William C.
Steel-Maitland, Rt. Hon. Sir Arthur


King, Commodore Rt. Hon. Henry D.
Ormsby-Gore, Rt. Hon. William
Strauss, G. R.


Lamb, Sir J. Q.
Owen, Major G. (Carnarvon)
Sutton, J. E.


Lambert, Rt. Hon. George (S. Molton)
Palln, John Henry
Taylor, R. A. (Lincoln)


Lansbury, Rt. Hon. George
Paling, Wilfrid
Taylor, W. B. (Norfolk, S. W.)


Law, Sir Alfred (Derby, High Peak)
Perry, S. F.
Thomas, Rt. Hon. J. H. (Derby)


Law, Albert (Bolton)
Pethick-Lawrence, F. W.
Tillett, Ben


Law, A. (Rosendale)
Peto, Sir Basil E. (Devon, Barnstaple)
Tinker, John Joseph


Lawson, John James
Phillips, Or. Marion
Tinne, J. A.


Lawther, W. (Barnard Castle)
Picton-Turbervill, Edith
Titchfield, Major the Marquess of


Leach, W.
Pownall, Sir Assheton
Todd, Capt. A. J.


Lee, Frank (Derby, N. E.)
Qulbell, D. F. K.
Tout, W. J.


Leighton, Major B. E. P.
Ramsay, T. B. Wilson
Train, J.


Llewellin, Major J. J.
Ramsbotham, H.
Trevelyan, Rt. Hon. Sir Charles


Locker-Lampson, Rt. Hon. Godfrey
Rawson, Sir Cooper
Vaughan-Morgan, Sir Kenyon


Longbottom, A. W.
Raynes, W. R.
Viant, S. P.


Lovat-Fraser, J. A.
Reynolds, Col. Sir James
Walker, J.


Lunn, William
Richardson, R. (Houghton-le-Spring)
Wallace, Capt. D. E. (Hornsey)


McConnell, Sir Joseph
Riley, Ben (Dewsbury)
Ward, Lieut.-Col. Sir A. Lambert


Macdonald, Gordon (Ince)
Ritson, J.
Wardlaw-Mllne, J. S.


MacDonald, Rt. Hon. J. R. (Seaham)
Roberts, Rt. Hon. F. O. (W. Bromwich)
Waterhouse, Captain Charles


McElwee, A.
Romerll, H. G.
Watkins, F. C.


Macpherson, Rt. Hon. James I.
Rosbotham, D. S. T.
Wells, Sydney R.


MacRobert, Rt. Hon. Alexander M.
Ross, Major Ronald D.
Welsh, James (Paisley)


Makins, Brigadier-General E.
Rowson, Guy
West, F. R.


Mander, Geoffrey le M.
Russell, Alexander West (Tynemouth)
Westwood, Joseph


Mansfield, W.
Salmon, Major I.
Whiteley, Wllfrid (Birm., Ladywood)


March, S.
Samuel, A. M. (Surrey, Farnham)
Whiteley, William (Blaydon)


Margesson, Captain H. D.
Samuel, Rt. Hon. Sir H. (Darwen)
Williams, Charles (Devon, Torquay)


Marjorlbanks, E. C.
Samuel, H. Walter (Swansea, West)
Williams, David (Swansea, East)


Markham, S. F.
Sandeman, Sir N. Stewart
Williams, T. (York, Don Valley)


Marshall, Fred
Sanders, W. S.
Wilson, C. H. (Sheffield, Attercliffe)


Mathers, George
Sawyer, G. F.
Wilson, G. H. A. (Cambridge U.)


Melville, Sir James
Shaw, Rt. Hon. Thomas (Preston)
Wilson, J. (Oldham)


Millar, J. D.
Shepperson, Sir Ernest Whittome
Wilson, R. J. (Jarrow)


Mills, J. E.
Shillaker, J. F.
Womersley, W. J.


Mitchell, Sir W. Lane (Streatham)
Shinwell, E.
Wood, Rt. Hon. Sir Kingsley


Mitchell-Thomson. Rt. Hon. Sir W.
Short, Alfred (Wodnesbury)
Wood, Major McKenzie (Banff)


Monsell, Eyres, Com. Rt. Hon. Sir B.
Simon, E. D. (Manch'ter, Wlthington)
Worthington-Evans. Rt. Hon. Sir L.


Montague, Frederick
Sinclair, Sir A. (Calthness)
Young, Rt. Hon. Sir Hilton


Moore, Sir Newton J. (Richmond)
Sinkinson, George



Moore, Lieut.-Colonel T. C. R. (Ayr)
Sitch, Charles H.
TELLERS FOR THE AYES.—


Mcrrls, Rhys Hopkins
Smith, H. B. Lees- (Kelghley)
Mr. Allen Parkinson and Mr. A.


Morris-Jones, Dr. J. H. (Denbigh)
Smith, Rennie (Penistone)
Barnes.


NOES.


Adamson, W. M. (Staff., Cannock)
Kelly, W. T.
Stephen, Campbell


Ayles, Walter
Kinley, J.
Turner, B.


Baldwin, Oliver (Dudley)
Lee, Jennie (Lanark, Northern)
Wallhead, Richard C.


Cove, William G.
Lindley, Fred W.
Wedgwood, Rt. Hon. Josiah


Forgan, Dr. Robert
Longden, F.
Wilkinson, Ellen C.


Hall, Capt. W. G. (Portsmouth, C.)
McGovern, J. (Glasgow, Shettleston)
Wright, W. (Rutherglen)


Hardie, George D.
Potts, John S.



Haycock, A. W.
Price, M. P.
TELLERS FOR THE NOES.—


Horrabin, J. F.
Sandham, E.
Mr. Beckett and Mr. W. J. Brown.


Jowett, Rt. Hon. F. W.
Simmons, C. J.

Upon the Tellers attending Table—

Mr. BECKETT: Mr. Speaker, it is a damned disgrace.

The hon. Member then seized the Mace, and proceeded with it to the Bar, where he was stopped by the Serjeant-at-Arms, who took the. Mace and replaced it upon the Table.

Mr. SPEAKER: In accordance with the decision of the House, I must call upon
the hon. Member for East Leyton, Mr. Brock way, to withdraw.

Mr. BROCKWAY: Out of respect to you, Mr. Speaker, I do so.

The hon. Member thereupon withdrew from the House.

Mr. SPEAKER: I must name the hon. Member for Peckham, Mr. Beckett, for grossly disorderly conduct.

The PRIME MINISTER: I beg to move,
That Mr. Beckett be suspended from the service of the House.

Question put "That Mr. Beckett be suspended from the service of the House."

The House divided: Ayes, 324; Noes, 4.

Division No. 437.]
AYES.
[3.43 p.m.


Acland-Troyte, Lieut.-Colonel
Eden, Captain Anthony
Law, Sir Alfred (Derby, High Peak)


Adamson, Rt. Hon. W. (Fife, West)
Edmondson, Major A. J.
Law, Albert (Bolton)


Addison, Rt. Hon. Dr. Christopher
Edmunds, J. E.
Law, A. (Rosendale)


Aitchison, Rt. Hon. Craigle M.
Edwards, C. (Monmouth, Bedwellty)
Lawrle, Hugh Hartley (Stalybridge)


Albery, Irving James
Egan, W. H.
Lawson, John James


Alexander, Rt. Hon. A. V. (Millsbro')
Elliot, Major Walter E.
Lawther, W. (Barnard Castle)


Allen, Lt.-Col. Sir William (Armagh)
England, Colonel A.
Leach, W.


Ammon, Charles George
Erskine, Lord (Somerset, Weston-s. M.)
Lee, Frank (Derby, N. E.)


Arnott, John
Falle, Sir Bertram G.
Leighton, Major B. E. P.


Astor, Viscountess
Ferguson, Sir John
Lindley, Fred W.


Atkinson, C.
Freeman, Peter
Llewellin, Major J. J.


Ayles, Walter
Fremantle, Lieut.-Colonel Francis E.
Lloyd, C. Ellis


Baker, John (Wolverhampton, Bilston)
Ganzonl, Sir John
Locker-Lampson, Rt. Hon. Godfrey


Baldwin, Rt. Hon. Stanley (Bewdley)
Gardner, B. W. (West Ham, Upton)
Logan, David Gilbert


Balfour, Captain H. H. (I. of Thanst)
George, Megan Lloyd (Anglesea)
Longbottom, A. W.


Balniel, Lord
Gibbins, Joseph
Lovat-Fraser, J. A.


Beamish, Rear-Admiral T. P. H.
Gibson, C. G. (Pudsey & Ottey)
Lowth, Thomas


Bellamy, Albert
Gibson, H. M. (Lancs, Mossley)
Lunn, William


Benn, Rt. Hon. Wedgwood
Gillett, George M.
McConnell, Sir Joseph


Bennett, Capt. Sir E. N. (Cardiff C.)
Gilmour, Lt.-Col. Rt. Hon. Sir John
Macdonald, Gordon (Ince)


Bennett, William (Battersea, South)
Glassey, A. E.
MacDonald, Rt. Hon. J. R. (Seaham)


Bentham, Dr. Ethel
Gossling, A. G.
McElwee, A.


Betterton, Sir Henry B.
Gould, F.
Macpherson, Rt. Hon. James I.


Bondfield, Rt. Hon. Margaret
Graham, Fergus (Cumberland, N.)
MacRobert, Rt. Hon. Alexander M.


Bourne, Captain Robert Croft
Graham, Rt. Hon. Wm. (Edin., Cent.)
McShane, John James


Bowyer, Captain Sir George E. W.
Granville, E.
Makins, Brigadier-General E.


Braes, Captain Sir William
Grattan-Doyle, Sir N.
Mander, Geoffrey le M.


Broad, Francis Alfred
Gray, Milner
Mansfield, W.


Bromfield, William
Greenwood, Rt. Hon. A. (Colne)
March, S.


Brooke, W.
Grenfell, D. R. (Glamorgan)
Marcus, M.


Brothers, M.
Gretton, Colonel Rt. Hon. John
Margesson, Captain H. D.


Brown, Col. D. C. (N'th'l'd., Hexham)
Griffiths, T. (Monmouth, Pontypool)
Marjoribanks, E. C.


Brown Ernest (Leith)
Grundy, Thomas W.
Markham, S. F.


Brown, Brig.-Gen. H. C. (Berks, Newb'y)
Hacking, Rt. Hon. Douglas H.
Marley, J.


Brown, Rt. Hon. J. (South Ayrshire)
Hall, F. (York, W. R., Normanton)
Marshall, Fred


Buchan, John
Hall, G. H. (Merthye Tydvll)
Mathers, George


Buxton, C. R. (Yorks. W. R. Elland)
Hamilton, Sir George (Ilford)
Matters, L. W.


Cadogan, Major Hon. Edward
Hamilton, Mary Agnes (Blackburn)
Melville, Sir James


Carter, W. (St. Pancras, S. W.)
Hamilton, Sir R. (Orkney & Zetland)
Messer, Fred


Cautley, Sir Henry S.
Hammersley, S. S.
Millar, J. D.


Cayzer, Sir C. (Chester, City)
Harris, Percy A.
Mitchell, Sir W. Lane (Streatham)


Cazalet, Captain Victor A.
Hartshorn, Rt. Hon. Vernon
Mitchell-Thomson, Rt. Hon. Sir W.


Chamberlain, Rt. Hn. Sir J. A. (Birm., W.)
Harvey, Major S. E. (Devon, Totnes)
Monsell, Eyres, Com. Rt. Hon. Sir B.


Chamberlain, Rt. Hon. N. (Edgbaston)
Haslam, Henry C.
Montague, Frederick


Chapman, Sir S.
Henderson, Right Hon. A. (Burnley)
Moore, Sir Newton J. (Richmond)


Charleton, H. C.
Henderson, Arthur, Junr. (Cardiff, S.)
Moore, Lieut.-Colonel T. C. R. (Ayr)


Chater, Daniel
Henderson, W. W. (Middx., Enfield)
Morris, Rhys Hopkins


Christie, J. A.
Heneage, Lieut.-Colonel Arthur P.
Morris-Jones, Dr. J. H. (Denbigh)


Church, Major A. G.
Hennessy, Major Sir G. R. J.
Morrison, Robert C. (Tottenham, M.)


Churchill, Rt. Hon. Winston Spencer
Herbert, Sir Dennis (Hertford)
Mort, D. L.


Clarke, J. S.
Herriotts, J.
Moses, J. J. H.


Clynes, Rt. Hon. John R.
Hills, Major Rt. Hon. John Waller
Mosley, Sir Oswald (Smethwick)


Cocks, Frederick Seymour
Hirst, G. H. (York W. R. Wentworth)
Murnin, Hugh


Colfox, Major William Philip
Hopkin, Daniel
Nathan, Major H. L.


Compton, Joseph
Hore-Belisha, Leslie
Newman, Sir R. H. S. D. L. (Exeter)


Courthope, Colonel Sir G. L.
Howard-Bury, Colonel C. K.
Noel Baker, P. J.


Cowan, D. M.
Hudson, James H. (Huddersfield)
Noel-Buxton, Baroness (Norfolk, N.)


Crichton-Stuart, Lord C.
Hunter, Dr. Joseph
Oldfield, J. R.


Crookshank, Capt. H. C.
Hurd, Percy A.
Oliver, George Harold (Ilkeston)


Culverwell, C. T. (Bristol, West)
Hutchison, Maj.-Gen. Sir R.
Oliver, P. M. (Man., Blackley)


Cunliffe-Lister, Rt. Hon. Sir Philip
Isaacs, George
Oman, Sir Charles William C.


Daggar, George
John, William (Rhondda, West)
Ormsby-Gore, Rt. Hon. William


Dallas, George
Johnston, Thomas
Owen, Major G. (Carnarvon)


Dalton, Hugh
Jones, F. Llewellyn- (Flint)
Palin, John Henry


Davies, Dr. Vernon
Jones, Rt. Hon. Leif (Camborne)
Paling, Wilfrid


Davies, Rhys John (Westhoughton)
Jones, Morgan (Caerphilly)
Penny, Sir George


Davison, Sir W. H. (Kensington, S.)
Kennedy, Thomas
Pethick-Lawrence, F. W.


Day, Harry
Kenworthy, Lt.-Com. Hon. Joseph M.
Peto, Sir Basil E. (Devon, Barnstaple)


Denman, Hon. R. D.
King, Commodore Rt. Hon. Henry D.
Phillips, Dr. Marion


Dickson, T.
Knight, Holford
Picton-Turbervill, Edith


Dudgeon, Major C. R.
Lamb, Sir J. Q.
Pole, Major D. G.


Dugdale, Capt. T. L.
Lambert, Rt. Hon. George (S. Molton)
Potts, John S.


Dukes, C.
Lane Fox, Col. Rt. Hon. George R.
Pownall, Sir Assheton


Duncan, Charles
Lang, Gordon
Quibell, D. F. K.


Ede, James Chuter
Lansbury, Rt. Hon. George
Ramsay, T. B. Wilson


Ramsbotham, H.
Smith, Frank (Nuneaton)
Tryon, Rt. Hon. George Clement


Rawson, Sir Cooper
Smith, H. B. Lees- (Keighley)
Turner, B.


Raynes, W. R.
Smith, Rennie (Penistone)
Vaughan-Morgan, Sir Kenyon


Remer, John R.
Smith, Tom (Pontefract)
Viant, S. P.


Reynolds, Col. Sir James
Smith, W. R. (Norwich)
Walker, J.


Richardson, R. (Houghton-le-Spring)
Smith-Carington, Neville W.
Wallace, Capt. D. E. (Hornsey)


Riley, Ben (Dewsbury)
Smithers, Waldron
Wallace, H. W.


Riley, F. F. (Stockton-on-Tees)
Snell, Harry
Ward, Lieut.-Col. Sir A. Lambert


Ritson, J.
Snowden, Rt. Hon. Philip
Wardlaw-Milne, J. S.


Roberts, Rt. Hon. F. O. (W. Bremwich)
Snowden, Thomas (Accrington)
Waterhouse, Captain Charles


Romeril, H. G.
Somerville, A. A. (Windsor)
Watkins, F. C.


Rosbotham, D. S. T.
Southby, Commander A. R. J.
Watson, W. M. (Dunfermline)


Ross, Major Ronald D.
Stamford, Thomas W.
Wellock, Wilfred


Rowson, Guy
Stanley, Lord (Fylde)
Wells, Sydney R.


Russell, Alexander West (Tynemouth)
Stanley, Maj. Hon. O. (W'morland)
Welsh, James (Paisley)


Salmon, Major I.
Steel-Maitland, Rt. Hon. Sir Arthur
West, F. R.


Salter, Dr. Alfred
Stewart, W. J. (Belfast, South)
Westwood, Joseph


Samuel, A. M. (Surrey, Farnham)
Strachey, E. J. St. Loe
Whiteley, Wilfrid (Birm., Ladywood)


Samuel, Rt. Hon. Sir H. (Darwen)
Strauss, G. R.
Whiteley, William (Blaydon)


Samuel, H. Walter (Swansea, West)
Sullivan, J.
Williams, Charles (Devon, Torquay)


Sandeman, Sir N. Stewart
Sutton, J. E.
Williams, David (Swansea, East)


Sanders, W. S.
Taylor R. A. (Lincoln)
Williams, T. (York, Don Valley)


Sawyer, G. F.
Taylor, W. B. (Norfolk, S. W.)
Wilson, C. H. (Sheffield, Attercliffe)


Sexton, James
Thomas, Rt. Hon. J. H. (Derby)
Wilson, G. H. A. (Cambridge U.)


Shaw, Rt. Hon. Thomas (Preston)
Thomson, Sir F.
Wilson, J. (Oldham)


Shepherd, Arthur Lewis
Thurtle, Ernest
Wilson, R. J. (Jarrow)


Shepperson, Sir Ernest Whittome
Tillett, Ben
Womersley, W. J.


Shillaker, J. F.
Tinker, John Joseph
Wood, Rt. Hon. Sir Kingsley


Shinwell, E.
Tinne, J. A.
Wood, Major McKenzie (Banff)


Short, Alfred (Wednesbury)
Titchfield, Major the Marquess of
Worthington-Evans, Rt. Hon. Sir L.


Simon, E. D. (Manch'ter, Withington)
Todd, Capt. A. J.
Young, Rt. Hon. Sir Hilton


Sinclair, Sir A. (Caithness)
Tout, W. J.



Sinkinson, George
Townend, A. E.
TELLERS FOR THE AYES.—


Sitch, Charles H.
Train, J.
Mr. Allen Parkinson and Mr. A.


Smith, Ben (Bermondsey, Rotherhithe)
Trevelyan, Rt. Hon. Sir Charles
Barnes.


NOES.


Haycock, A. W.
Sandham, E.
TELLERS FOR THE NOES.—


Kinley, J.
Stephen, Campbell
Mr. L. J. Brown and Mr. McGovern.


Question, "That the Clause be read a Second time," put, and agreed to.

Mr. SPEAKER: The hon. Member will withdraw from the House at once.

HON. MEMBERS: He has run away.

BUSINESS OF THE HOUSE.

Mr. STANLEY BALDWIN: Can the Prime Minister announce the business to be taken next week?

The PRIME MINISTER: On Monday, we shall take Supply [17th Allotted Day], Navy Estimates; Coal Mines Bill, consideration of Lords reason for insisting on certain of their Amendments; Unemployment Insurance, Money Resolution, Report.
Tuesday: Finance Bill, Report.
Wednesday: Unemployment Insurance Bill, Second Reading; London Naval Treaty Bill, Second Reading; and further stages, which I believe are mainly formal, of the Public Works Facilities Bill and the Public Works Loans Bill.
Thursday: Supply [18th Allotted Day]. The Vote to be taken will be announced later.
Friday: Finance Bill, which we hope will have reached the Third Reading stage.
The text of the London Naval Treaty Bill will be available to-morrow. It is hoped to complete the further stages of the Road Traffic Bill to-morrow, after the Unemployment Insurance, Money Resolution, which is the first Order on the Paper, has been disposed of.

Mr. BALDWIN: Is it necessary to take the London Naval Treaty Bill before the House rises for the Recess? Gould not that be taken in the autumn?

The PRIME MINISTER: I should like very much if that were possible. It has been put down, but I confess that I have not quite satisfied myself, except to this extent, that it undoubtedly has been the practice that legislation arising out of Treaties should be passed before the Treaties are ratified; but I do not think that it is quite necessary that it should be done. However, I will look into the matter further, and, if the right hon. Gentleman will put a further question to me, I will give him any final decision.

Mr. BALDWIN: The only other question which I want to raise relates to the Public Works Loans Bill. There is a very important question which arises from that Bill, and, if the London Naval Treaty Bill is taken, it looks as if the Public Works Loans Bill may come on very late. As there is an important principle involved, I should like to know whether there is any possibility of that Order being taken at a more convenient time. It looks as if it might be a very late sitting.

The PRIME MINISTER: That is perfectly true. What I have done in announcing the business for next week is to try to make a substantial contribution towards the rising of the House at the end of the week after next, and I hope that we shall all co-operate for that purpose. Certainly, I will do everything that I can to meet the convenience of hon. Members. Of course, if it is impossible, we shall have to take a day in the week following, but I hope that will not be necessary.

Sir AUSTEN CHAMBERLAIN: Will the right hon. Gentleman remember that on the Public Works Loans Bill the Government moved to report Progress. They took it out of an afternoon sitting by the Motion to report Progress. They must surely give the House a proper opportunity of discussing a question with which they themselves were not at that moment prepared to proceed.

The PRIME MINISTER: It was very nearly the end of the sitting when Progress was reported. I am hoping that the business connected with this Bill will be in such a stage when we bring it forward again that, so far as we are concerned, no great time will be required in order to get it through.

Sir A. CHAMBERLAIN: Does the right hon. Gentleman mean by that that he is going to make a change in the Bill??

The PRIME MINISTER: Certainly not; exactly the opposite.

Mr. BALDWIN: May I ask how far it is proposed to go with the Finance Bill to-night., so that we may have some guidance as to the length of the sitting?

The CHANCELLOR of the EXCHEQUER (Mr. Philip Snowden): I am afraid that it is impossible for me to
answer that question now, but, if it is addressed to me later, I shall be able to reply.

Ordered,
That the Proceedings on the Finance Bill have precedence this day of the Business of Supply."—[The Prime Minister.]

MESSAGE FROM THE LORDS.

That they have agreed to,—

Stockport Corporation Bill,

London, Midland and Scottish Railway (No. 2) Bill,

Southern Railway Bill,

Manchester Corporation (General Powers) (No. 1) Bill (Certified Bill), with Amendments.

That they have passed a Bill, intituled, "An Act to establish a Court of Criminal Appeal in Northern Ireland, and to amend the law relating to appeals in criminal cases in Northern Ireland." [Criminal Appeal (Northern Ireland) Bill [Lords.]

And also, a Bill, intituled, "An Act to empower the London County Council to make a new street, street improvements, and other works in the vicinity of the Elephant and Castle, and to construct and work new tramways in connection therewith; and for other purposes." [London County Council (Improvements) Bill [Lords].

Manchester Corporation (General Powers) (No. 1) Bill (Certified Bill),

Lords Amendments to be considered To-morrow, pursuant to the Order of the House of 11th December.

London County Council (Improvements) Bill [Lords],

Read the First time; and referred to the Examiners of Petitions for Private Bills.

Orders of the Day — FINANCE BILL.

Order read for Consideration of Bill, as amended.

Sir DENNIS HERBERT: I beg to move,
That the Bill be re-committed to a Committee of the Whole House in respect of Part III.
4.0 p.m.
I can explain my reasons for moving this Motion, which stands in my name and the names of other hon. Members, in a very few sentences. The House will remember that this Part of the Bill is to enable the Revenue to obtain Estate Duty in cases where a deceased person has, during his lifetime, through the medium of a company, endeavoured to avoid liability to the duty. The method which is adopted in this Part of the Bill is to make the Estate Duty payable by the company through the medium of which the recently deceased person acted. As the Bill reads at present, the demand for Estate Duty is made upon companies of a certain type, which include foreign companies, and, as the Clauses are worded, it includes foreign companies which are not in any way under the jurisdiction of the courts of this country. It seems to me that there are two alternatives, one of which must be followed in this matter. The first—an easy course—would be to amend these Clauses in such a way that they would not purport to apply to companies or persons who are outside the jurisdiction of this country. The other form would, I am afraid, necessitate a complete re-drafting of these Clauses, so as to legislate against the man himself who is in this country, instead of against the company which is outside the jurisdiction of this country.
There are two Amendments on the Order Paper, one in my name and the names of other hon. Members, to strike out the words "wheresoever incorporated." But that, I agree, would go unnecessarily far, because there are foreign companies which carry on business in this country and are liable to Income Tax. My hon. Friend the Member for North-East Bethnal Green (Major Nathan) has an Amendment, which, I think, would include all the foreign companies
which can come under the jurisdiction of our courts, and, if the Chancellor of the Exchequer will be satisfied to accept an Amendment which would limit this to companies over which we have jurisdiction, then I should not desire to press this Motion. But may I remind the House that I have got, I think, very good reasons for asking that one of the two alternatives may be accepted because—and I think the Chancellor will agree here—it would not do for us to pass an Act of Parliament which appeared to impose a liability to taxation on a company entirely outside the jurisdiction of our courts. It is perfectly true that it could only be ineffective, but there is a danger, because not only do we legislate against these companies, but also against anyone who may be a director of a foreign company, whom we could not get at; but, under the law as the Bill stands, if a foreigner who is not a subject of this country came over to this country on a temporary visit, and he happened to be a director of that company, he would be technically, at any rate, liable to a penalty, because his company had not supplied information. I only wish to see cleared up a position which might possibly make us ridiculous, and if the Chancellor is prepared to limit the effect of these Clauses to companies which come under the jurisdiction of our courts, then I should have no wish to press this Motion.

Captain BOURNE: I beg to second the Motion.

The CHANCELLOR of the EXCHEQUER (Mr. Philip Snowden): The hon. Member's Motion is to re-commit in respect of the whole of Part III, which, of course, covers a great deal more ground than he covered in his remarks. I think his purpose in submitting this Motion is to secure consideration of one particular point, and that is to restrict the Bill to companies which are within the jurisdiction of our courts. That matter was discussed at very considerable length during the Committee stage of the Bill, and I fail to see what useful purpose would be served by further discussion in Committee, because the Report stage will provide all the opportunities that the hon. Member needs.

Sir D. HERBERT: Will the right hon. Gentleman allow me to explain for one moment? I am afraid I moved this
Motion rather in a formal way to get this explained by the Chancellor of the Exchequer, but my point about re-committing was that if the Chancellor wants, or considers it possible, to deal with the case of a man who is acting through the medium of a foreign company outside our jurisdiction, it is necessary to re-draft the whole of this Part of the Bill.

Mr. SNOWDEN: Speaking not as a lawyer, I should not think that if the House thought it desirable to incorporate such an alteration as the hon. Member suggests it would mean a new Clause. But the point is this. I think the matter could be quite as adequately discussed on Report as in Committee. I cannot at the moment, of course, say what attitude I should take to any Amendment that the hon. Member might move upon this matter, but, as I said, we can deal with this point on Report. There are not a great many Amendments to Clauses 32 to 36. A number of those are in my name, and a number are merely what might be called of a drafting character. Therefore, I think when we come to the consideration of those Clauses the point which the hon. Member wants to raise will be adequately discussed.

Sir D. HERBERT: In those circumstances, with the permission of the House, I will withdraw this Motion, merely saying that my only reason for moving it was in case the Chancellor of the Exchequer might wish to take a course which, quite obviously, he does not.

Motion, by leave, withdrawn.

Bill, as amended, considered.

NEW CLAUSE.—(Relief from duty in case of hydrocarbon oil used on board lifeboats.)

Sub-section (8) of section two of the Finance Act, 1928, which provides for the repayment of duty paid in respect of hydrocarbon oil used on board fishing boats, shall be extended so as to apply to duty paid in respect of hydrocarbon oil used on board lifeboats owned by the Royal National Lifeboat Institution, or for the purposes of any tractor or gear owned by the said institution and used for the purpose of launching or hauling in any such lifeboats.—[Mr. P. Snowden.]

Brought up, and read the First time.

Mr. P. SNOWDEN: I beg to move, "That the Clause be read a Second time."
This Clause is to carry out, not a pledge but a wish that was very strongly expressed in many quarters in Committee to exempt from duty hydrocarbon oil used on lifeboats owned by the Royal National Lifeboat Institution or in their tractors and gear. The House is well aware that there is always a danger in making concessions, which appear to be small, without very full consideration. I have had this matter fully discussed by the Customs authorities, and they think that they can work the rebate without, perhaps, any very serious consequences. The cost is not very large—at the outside about £500 a year, but, of course, as the number of tractors increases, the cost will increase proportionately. May I add this, that I am very glad to be able to make this concession to an institution which does such excellent work.

Rear-Admiral BEAMISH: I only rise to express my thanks to the Chancellor of the Exchequer for the graceful concession he has made, which is much appreciated by those who are associated with me. In fact, he has actually given us rather more than we asked for.

Clause added to the Bill.

NEW CLAUSE.—(Money payable under life assurance policies applied for payment of estate duty not to be aggregated for purposes of ascertaining rate of duty.)

Notwithstanding anything contained in any Act of Parliament to the contrary money to which this section refers passing on a death of a deceased person shall be deemed to form an estate by itself for purposes of estate duty payable on the death of the deceased and shall not be aggregated with any other property for the purpose of ascertaining the rate of estate duty payable in respect of property passing on the death of the deceased.

The money to which this section refers is money payable on the death of the deceased (and not at any earlier date) under a policy or policies of life assurance on the deceased's life to the extent to which such money is applied in payment of estate duty payable on the death of the deceased.—[Sir D. Herbert.]

Brought up, and read the First time.

Sir D. HERBERT: I beg to move, "That the Clause be read a Second time."

Mr. CHURCHILL: May I rise to a point of Order for the purpose of asking Mr. Speaker whether you can give us any guidance as to the new Clauses you propose to select or as to the principle upon which they will be selected. There is, for instance, the new Clause standing in the name of the hon. and gallant Member for Oxford (Captain Bourne) which was not the subject of any discussion during the Committee stage. Some importance is attached to it although it is not an important point.
There is also another new Clause upon the Order Paper on the same point. Perhaps you would be good enough to give us some guidance as to the principle upon which the new Clauses will be selected so that we can prepare ourselves for the discussion.

Mr. SPEAKER: If the right hon. Gentleman desires to know the new Clauses I propose to select I am quite prepared to tell him, but I do not think it would be serving any useful purpose if I gave the reasons for selecting them. It is not the practice of the House to do so, and, indeed, I am saved from that obligation by the Standing Orders. My intention is to call the new Clause standing in the name of the Noble Lord and after that the new Clause standing in the name of the hon. Member for Watford (Sir D. Herbert).

Mr. SMITHERS: There is an Amendment standing in my name and other hon. Members dealing with a reduction of the Stamp Duty on foreign marketable securities, a matter which was not raised in Committee. We have been asked to raise this question by large and powerful interests in the City, and I respectfully submit that it might be allowed to be discussed.

Mr. SPEAKER: The hon. Member is now entering into an argument. The new Clause to which he has referred will create a charge, and is therefore out of order.

Sir D. HERBERT: The Chancellor of the Exchequer knows that there are cases in which a man who is likely to leave a very large estate on his death and who desires to provide for Death Duty by means of an insurance on his life, has to effect an insurance for a very large amount. The result, under the law
as it stands at present, is that the addition to his estate of that very large amount of insurance money, which is for the purpose of paying Death Duty, increases very likely the rate of the duty payable on the whole estate. The Amendment is not drawn with a view of excluding these policy moneys from the payment of Death Duty, but it proposes that they should form "an estate by itself" and therefore only pay a rate of duty calculated upon the amount of the policy money. A concession of this kind would probably not cost the Treasury anything in the end because the effecting of life assurance policies of such high figures as people would wish is hindered at the present time by the fear that the rate of duty on their estate will be largely increased.
Since I put this new Clause on the Order Paper an hon. Member has suggested to me, and indeed has embodied the suggestion in a new Clause, a concession which would be rather smaller on the part of the Treasury. My proposal is that these policy moneys should pay a rate of duty calculated as if the policy moneys were "an estate by itself," and, therefore, pay at a comparatively low rate. My hon. Friend's suggestion is that they should not be aggregated so as to increase the total but that the rate of duty they should pay should be the same rate of duty as the rest of the estate would pay if it were not technically increased by these policy moneys. I hope the Chancellor of the Exchequer will think that some concession on these lines would not only tend to increase life assurance in this country but would keep up if not even increase the yield of Estate Duty. It would mean that the duty would be much more easily collected than is the case at the present time.
If the right hon. Gentleman is prepared to give the somewhat less concession it would be perfectly easy to amend this new Clause in such a way as to provide that the rate of duty on these insurance moneys shall be the rate of duty payable on the rest of the estate. Suppose an estate pays duty at the rate of 20 per cent. Under my new Clause with the suggested alteration, which could easily be made, the life assurance money would still pay duty at the same rate as the estate, but it would not be
added to the estate for the purpose of raising the duty by another one per cent. This is a concession which I should like to press upon the Chancellor of the Exchequer and I hope he will give it his most earnest consideration. It would be easy to revise the new Clause in order to make that slight alteration.

Captain BOURNE: I beg to second the Motion.
I hope the Chancellor of the Exchequer will give some concession on this matter. Obviously, from the point of view of the Revenue it must be desirable that people should be encouraged to insure in order to meet the payment of Death Duties, because it would prevent capital, which is urgently needed in industry, being kept back in order to provide for the payment of Death Duties. One of the absurdities of the present situation is that if the rate of the Death Duties rises owing to a change in the law and a man has to take out a larger policy, the effect of this being aggregated into his estate may actually lose money. It is a question whether the additional payment brings the total estate over the balancing point. I feel that that is a most undesirable thing.

Mr. ARTHUR MICHAEL SAMUEL: The hon. Member for Watford (Sir D. Herbert) took the case of a man with a very large fortune and paying 20 per cent. in Death Duty. I am going to pursue the case of the smaller man with a fortune, say, of £500, the small shopkeeper, the small factory owner, with a fortune of £8,000 or £10,000. When this matter was discussed on the last occasion the Financial Secretary electrified us by what he said, because it showed that he had not understood what I said when I dealt with the matter, or that he had not grasped the essence of the insurance point. What the Financial Secretary said was this:
The man who has got a business and does not attempt to increase it by saving, but who puts his money into life assurance.
What is life assurance but saving? Many men in business do not put their savings into their own businesses entirely. A man with £500 saved, a little greengrocer or shoemaker, will take out a small assurance policy of £500, upon which he will pay a premium of £10 a year. If he puts
his saved money entirely into his business it is very difficult to realise what may be required to wind up his estate, and it is better for him to put some money into a life assurance policy. The Financial Secretary went on to say:
As a matter of fact, the Government already treats a man who saves by life insurance in a more favourable way, because, whereas a man who saves by means of increasing his ordinary investments has to pay the full Income Tax upon what he puts to increasing his capital, the man who saves by means of life insurance is allowed a peculiar form of exemption which is the statutory law of the land with regard to life insurance premiums."—[OFFICIAL REPORT, 7th July, 1930; col. 155, Vol. 241.]
The Financial Secretary fails entirely to grasp the facts. When a man pays a premium on a life insurance policy that premium provides the nest-egg by which at his death he provides for the payment of Death Duty. His premium pays income tax. The insurance company puts the premiums out at interest, and upon the interest that the company receives it pays Income Tax, very often at a higher rate than that for which the insured person is probably liable in his private life. The Financial Secretary said that the Government already treat the man who saves by means of life insurance in a more favourable way because he has certain allowances provided by the Act of 1918 or the amending Act of 1920. But the Financial Secretary is entirely wrong. The insured person does not get any preference. The report of the Royal Commission pointed out that these allowances were made owing to the fact that insurance companies were charged on a man's premiums a higher rate of Income Tax than was really applicable to the man who had insured his life.
Let me show how this aggregation of a policy to a man's estate hurts him. Take the case of a little shopkeeper in the country. We will assume that he is a small man, and that he insures for £500 on payment of £10 a year. If his estate without the life policy is only £500 on death it pays only 1 per cent., I believe. Suppose that his insurance policy has earned £100 bonus, and is worth £600. Aggregating the £600 to the £500 you have £1,100, and under the scheme that man has to pay, on his original £500 estate 3 per cent. as against 1. That may be all right for the
Revenue, but it is not worth while to insure. Take the case of a man with a factory. I have had a good deal of experience of this myself. Take the case, not of a limited liability company, but a plain family business. Suppose that a man has £9,500, all invested in the factory. Imagine that he takes out an insurance policy for £1,500 to protect the business against drain on capital at his death. On a £9,500 estate the tax will be 4 per cent. All the money is in bricks and mortar, or machinery and stock-in-trade, or book debts, and it is difficult to get that money out to pay the Revenue. He, therefore, says that in order that the business shall not be destroyed he will insure for £1,500. His £9,500 of stock-in-trade is aggregated to the £1,500. If he had £9,500 only he would pay £380, but by adding the £1,500 to the £9,500 the estate of £9,500 is subject to 5 per cent. tax, and is penalised to the extent of £95 simply by aggregation.
I think the Chancellor of the Exchequer will agree that, quite apart from the Exchequer side of the matter, it is against public policy to put any clog upon thrift so far as the citizen is concerned, and that it is bad for the State that anything should be done to reduce the "work-while" to insure. As I said the other day, we shall support any effort that the Chancellor of the Exchequer may make towards converting some of our big War Loans. No type of subscriber to conversions of these War Loans will be more helpful to the Chancellor of the Exchequer than the great insurance companies. The more you strengthen the insurance companies, the more you help the thrift of the people through the insurance companies, the better will be your chance of finding money quickly for the conversion of loans.
The Chancellor of the Exchequer must remember that whatever concession he may make, whether on the lines of the Amendment of the hon. Member for Watford (Sir D. Herbert) or on the lines of the not quite so drastic Amendment which I put on the Paper, he will not be making a complete surrender of money to the public. As the premiums accumulate in the hands of the life insurance company, the income thereof
at compound interest always pays Income Tax at the higher rate. Therefore, the more the Chancellor of the Exchequer can get life insurance carried out the larger will be the tax yield from the life insurance fund. Life insurance is a very good handmaiden of the Treasury. This country is very much behind-hand with it. I believe that in this country the amount per head per year is only £30, compared with £90 in the United States. Apart from that, I lay down the principle that a man ought not, to suffer a penalty by having his death duties increased for that part of his estate which represents no life insurance simply because he has been thrifty and has increased his asset by insuring his life for death duties.

Mr. P. SNOWDEN: I really must, protest against the statement that the hon. Member has made two or three times, namely, that by the present practice of aggregating the proceeds of a life insurance policy to the general estate a man is being penalised. There is no justification for that statement. The hon. Member bases his statement upon some impression that there is a special virtue in saving by means of a life insurance policy. I quite agree that the State has appreciated that point by dealing very generously with payments made for insurance premiums. But there is a great deal to be said on the other side. Life insurance is not the only form of saving. Building societies offer an equally good method of saving. Take the case cited by the hon. Member of a business man, and the point on which he criticised an observation made by my hon. Friend the Financial Secretary. Surely if a man is in business it, is just as worthy a purpose to apply his savings or profits from the business to the extension of that business as it is to take out a life insurance policy?

Mr. MACQUISTEN: That would be putting all his eggs in one basket.

Mr. SNOWDEN: If he is making profits out of his business it is a very good thing that he should do so. This matter was discussed on the Committee stage of the Bill. The object of hon. Members who are associated with this Amendment and with similar Amendments is to extend preferential treatment to moneys from a policy insuring a sum payable at death. The insured
person has had the advantage of a reduction of his Income Tax upon premium payments during the currency of the policy, and what the hon. Member asks is that he should be given a double advantage when the sum insured becomes payable at his death. That is a position which I cannot accept. It must not be assumed that I am in any way hostile to life insurance. On the contrary I am a strong advocate of it. It is an admirable way of making provision, by an endowment policy for a rainy day or old age, or by a death policy for the benefit of those who may be dependent upon the insured person.
There is a great deal of difference between the speech of the hon. Member for Watford (Sir D. Herbert) and the terms of the Amendment itself. The hon. Member put a different construction on the Amendment from that which the words of the Amendment would obviously convey. As I understand the Amendment, it proposes to depart from the present practice of aggregating the insurance policy with the rest of the estate and to treat it separately, and that this concession would apply to the amount of the policy money used for payment of Estate Duty. The hon. Member said he hoped it would be no disadvantage to the Revenue, but such is not the case. The officials of the Revenue calculate that if the Amendment were adopted it would cost £2,000,000 a year on the existing amount of insurance. Of course we know that if such an advantage as this were granted there would be greater recourse to insurance policies in order that estates might be assessed at a lower rate than that which would be applicable to the aggregated estate. That may be a very good thing from the point of view of life insurance, but it does not commend itself to those who look at the question from the Revenue standpoint.
I am sure that the hon. Member for Farnham (Mr. A. M. Samuel) did not intend his remarks to convey the impression that in some quarters they might convey. He referred to the help that insurance companies are or can be in the matter of taking up Government stock. Of course we all know that. Large insurance companies are very large holders of Government stock, but that fact ought not to be used as an argument. No Minister and no House of
Commons would give concessions which could not be justified on their merits to insurance companies, in the hope that those companies might be induced to subscribe to Government stock. For all these reasons I regret that I cannot accept the Amendment.

Mr. MACQUISTEN: The Chancellor of the Exchequer has not dealt with the point that the Revenue is getting Income Tax all the time that these premiums are being paid, and that therefore double tax is being paid. I may not have understood him, but I do not think that he cleared up that point.

Sir BASIL PETO: The Chancellor of the Exchequer ended his argument by talking of the Amendment as one designed to give advantage to the insurance companies. He complained that we have said that the insurer was penalised by the present system of aggregation. He also suggested that we were asking him to give the insurer preferential treatment during his life and make a present to his estate on his death. I think if there is any exaggeration on the one side there is also exaggeration on the other. The proposed new Clause does not suggest that these insurance policies should not pay Death Duties, but it does propose a change in the present system under which it is almost impossible to catch up with the amount required to meet Death Duties from scale to scale in the range of those duties without inflicting hardship, without imposing a fine, as it were, on the insured person, if the Chancellor of the Exchequer does not like the use of the word "penalising" in this connection.
I wish to repeat the case which I put to the Financial Secretary during the Committee stage. Take the case of a man who has reason to believe that be will die worth about £100,000. He takes out a policy to cover the 19 per cent. duty which would be due on that estate, representing a sum of £19,000. If, as a matter of fact, he dies worth £101,000—his estimate having been very nearly accurate—and the £19,000 is added to the estate, a figure of £120,000 is arrived at and the scale of Death Duties on that estate would be 20 per cent. If it exceeds that sum by only a few pounds, a 22 per cent. scale is reached, and if a 22 per cent. rate is applied—as it might
easily be with the aggregation of the insurance to the estate and the addition of £1,000 or £2,000 of capital not anticipated by the deceased—then a sum of £24,000 would be payable instead of £19,000.
It is a matter of no less than £5,000 additional charge, although this man might have made a very accurate calculation of what would be necessary to meet Estate Duty on the amount of his estate. The Chancellor of the Exchequer may say that all these things ought to be allowed for in the insurance, but that means that in every case it would be necessary to take out a vastly larger policy than appears to be necessary according to the scale of Estate Duty. The Chancellor of the Exchequer talks of this proposal as being of advantage to the insurance companies, but I think, on the other hand, it would be of immense advantage to the Treasury. He also says that it would cost £2,000,000 at the present time. Has he considered the advantage which the Treasury will gain through encouraging the provision, by this particular method, of the sums necessary to meet Estate Duty? There is no possible means by which cash can so certainly be provided at, so to speak, a moment's notice, on the death of a person, as through the insurance company paying up the amount of an insurance policy. From the national point of view also, it is of great advantage that this system of insuring should be encouraged because, in every case, where there is adequate insurance for Estate Duty there is not that dislocation which would otherwise occur, either to a business or to the management of an estate, on the death of the owner or holder of that business or estate.
Both from the national point of view and, from the Chancellor's point of view, it would be an advantage to accept the new Clause. All that it asks is that the amount of insurance policies which are actually applied to the payment of Estate Duty, on the death of the deceased, should not be aggregated to the estate. The proposal is strictly limited to money actually provided and used for the payment of Estate Duty. The Chancellor of the Exchequer is on very weak ground when he suggests, as his final reason for opposing this new Clause, that
it would act as such an encouragement to the provision of sums for the payment of Estate Duty, by means of insurance, that there would be a vastly greater number of such policies in the future. The right hon. Gentleman seemed to suggest that that would cost even more than the £2,000,000, but I cannot see that for myself. It seems to me that the more people provide for Estate Duty by means of insurance, the better it is for the Treasury and the country.
The money which is used to provide an insurance policy of this kind is not always money which would otherwise be saved in some alternative form. It is often money which would be spent if it were not for the inducement of having an insurance policy of this kind and the necessity of keeping the premiums paid up in order to keep the policy alive. That is the best spur to saving that one could have. The Chancellor of the Exchequer is quite wrong in contrasting two methods of saving and saying that the one is just as virtuous as the other. It is all to the advantage of the Treasury that the largest possible amount of money should be provided for the payment of Estate Duty by insurance during the lifetime of the person concerned. Of that I am perfectly convinced, and I hope that the right hon. Gentleman's main reason for not accepting the new Clause is one to which he will give further and serious consideration.

Mr. ALBERY: When I put my name to a somewhat similar proposal during the Committee stage I had not in my mind any intention of introducing some provision into this Bill which would be especially favourable to life insurance companies. What I had in mind was that it would be helpful to the Treasury and would also be helpful to those who have to pay very heavy taxation. When taxation is very heavy, especially taxation of this kind, it is wise on the part of the State, if, indeed, it is not the duty of the State, to make the payment of that taxation as easy as possible and to provide all reasonable facilities for payment. In these circumstances, people taking out life insurance policies with the object of meeting approximately the amount of the Death Duties which will one day be due from their estates are only in effect saying to the State, "I desire to start paying in advance. I desire, year by year, to set aside a certain
amount in order to pay you, when the time comes, without undue dislocation what will be your due."
There is another point which the Treasury officials must have missed. I do not think that the Treasury would lose by this proposal. I admit that I am not in a position to work out these figures with any degree of accuracy, nor have I any experience of that kind, but there are a great many estates to-day which pass before death takes place. If this proposal were adopted it might make a considerable difference in that respect. If people were able to provide in this way for Death Duties, there would not be the large amount of property passing before death which is undoubtedly passing at the present time. Whether that is desirable or not from the general point of view is no doubt open to argument, but, from the Treasury point of view, there can be no doubt whatever that it would be a distinct gain.

Mr. ATKINSON: The Chancellor of the Exchequer seems to assume that what he calls saving by insurance, ought not to get any more encouragement than any other form of saving. It all depends on the view one takes of insurance, whether one considers that the State should encourage it or not. The difference between insurance and other saving is that, ordinarily speaking, a man saves at the last what, he has not spent on pleasure and the like during the year, but in the case of insurance it is a first charge on income. It is the first thing a man pays, and he pays it even if he has to go short of something else. Therefore it, is a form of thrift which, in a sense, acts by compulsion and it is one which the State has regarded as worthy of encouragement. It seems uncommonly hard on one who adopts that form of thrift, not merely that this money should have to be paid in Estate Duty, but that it should also go to increase the rate of duty payable on the whole estate.
There is a further point. The right hon. Gentleman seems to assume that this is money which would be saved in any case. Supposing a man dies within two or three years after taking out an insurance policy, the premium on which comes to £500 a year. If he had been saving that money in the ordinary way it would have amounted to £1,500 on his death, but because this man has had—
from the insurance point of view, of course—the luck to die within two or three years after effecting a policy there may be £10,000 or £20,000 payable to his estate and that is treated as a windfall by the Treasury. The present system operates very unfairly in that respect, and I would urge the Chancellor of the Exchequer to do something, even if only on a small scale, to encourage insurance—which is getting less popular than it used to be because people are beginning to realise how heavily this kind of thing is hit in one form or another.

Major NATHAN: I find myself quite unable to support the new Clause. It does not seem to me to be apt for the purpose of meeting the point which it has in view. I suggest to the right hon. Gentleman however that this is a problem which requires the careful and sympathetic consideration of the Treasury. It must be to the advantage of the Treasury and the public at large that the payment of Estate Duty should be facilitated as far as possible. It must be an advantage that there should be available, at the moment when it is required, a sum of money which can be paid over to the Treasury on account of Estate Duty without dislocation. Reference has already been made to the possibility of dislocation to the business of a deceased person, perhaps depriving that business of working capital which it urgently needs for development purposes. That is all very true. There have, indeed, been many cases where men advancing in years and foreseeing the necessity of paying Estate Duty under the present rules, have formed private businesses into public companies for no other purpose than to meet that situation.
The special consideration to which I would direct the attention of the right hon. Gentleman is this. On the whole, the people who insure against Death Duties are the wealthy members of the community, and, speaking quite broadly, they are people whose property is invested in stocks and shares. As things are, those stocks and shares have to be realised for the purpose of paying Estate Duty, and in the case of a large estate the immediate result is to depreciate the market value of the securities in question. It is well known that the death of a prominent industrialist known to have large investments in any particular
security, will have an effect on the market even before a single sale has taken place. Even the news of the serious illness of such a person may have a great influence in depreciating the market. [Interruption.] I did not quite catch the right hon. Gentleman's intervention, but I hope he is not suggesting what is contrary to all experience, namely, that the apprehension that large quantities of stock may be thrown upon the market, will not have a depreciatory effect upon that stock. I could quote, within my own experience, case after case where, when Death Duties have had to be found by selling securities upon the market, the greatest care has had to be taken to ensure that the market will not be unduly depreciated. I would like to say this to the Chancellor of the Exchequer, and I am satisfied, with all respect to him, of the substance of the point, that if you have a deceased dying possessed and well-known to be possessed of large blocks of securities in any particular companies, and it is known that there will have to be a liquidation of securities for the purpose of paying Death Duty, the market depreciates, with the result that other persons possessing the same securities find during the period of liquidation that their shares have depreciated

below the point at which they would have stood had it not been necessary to sell the securities. I believe that, to a large extent, the Treasury frequently loses large sums in that way. While we on this side are unable to support this Amendment, I would ask the Chancellor of the Exchequer before next year to give consideration to the principle which underlies it.

Mr. SMITHERS: I want to say a word in reply to what has been said by the hon. Member who has just spoken. For the whole of my life I have been on the Stock Exchange, and I do not remember a case of a large shareholder dying which has affected the price of the shares because of his death. It is absurd to say that, if Lord Melchett died tomorrow, there would be a fall in Imperial Chemicals, or, if Lord Bearsted died, there would be a fall in Shell oil. The statement that the death of a man who is known to be a big shareholder of certain kinds of shares affects the price in the way which has been stated is one with which from my own personal experience I cannot agree.

Question put, "That the Clause be read a Second time."

The House divided: Ayes, 140; Noes, 271.

Division No. 438.]
AYES.
[5.4 p.m.


Acland-Troyte, Lieut.-Colonel
Duckworth, G. A. V.
King, Commodore Rt. Hon. Henry D.


Albery, Irving James
Dugdale, Capt. T. L.
Knox, Sir Alfred


Allen, Lt.-Col. Sir William (Armagh)
Eden, Captain Anthony
Lamb, Sir J. Q.


Atkinson, C.
Edmondson, Major A. J.
Lane Fox, Col. Rt. Hon. George R.


Baldwin, Rt. Hon. Stanley (Bewdley)
Erskine, Lord (Somerset, Weston-s.-M.)
Law, Sir Alfred (Derby, High Peak)


Bainiel, Lord
Falie, Sir Bertram G.
Leighton, Major B. E. P.


Beamish, Rear-Admiral T. P. H.
Ferguson, Sir John
Locker-Lampson, Rt. Hon. Godfrey


Betterton, Sir Henry B.
Fermoy, Lord
Long, Major Eric


Bourne, Captain Robert Croft
Galbraith, J. F. W.
Lymington, Viscount


Boyce, H. L.
Ganzoni, Sir John
McConnell, Sir Joseph


Brass, Captain Sir William
Gibson, C. G. (Pudsey & Otley)
Macdonald, Capt. P. D. (I. of W.)


Briscoe, Richard George
Gilmour, Lt.-Col. Rt. Hon. Sir John
Macquisten, F. A.


Brown, Col. D. C. (N'th'l'd., Hexham)
Gower, Sir Robert
MacRobert, Rt. Hon. Alexander M.


Brown, Brig.-Gen. H. C. (Berks, Newb'y)
Grace, John
Makins, Brigadier-General E.


Buchan, John
Graham, Fergus (Cumberland, N.)
Margesson, Captain H. D.


Buckingham, Sir H.
Grattan-Doyle, Sir N.
Marjorlbanks, E. C.


Cadogan, Major Hon. Edward
Gretton, Colonel Rt. Hon. John
Meller, R. J.


Cautley, Sir Henry S.
Gritten, W. G. Hcward
Merriman, Sir F. Boyd


Cayzer, Sir C. (Chester, City)
Guinness, Rt. Hon. Walter E.
Mitchell, Sir W. Lane (Streatham)


Chamberlain, Rt. Hn. Sir J. A. (Birm., W.)
Gunston, Captain D. W.
Mitchell-Thomson, Rt. Hon. Sir W.


Chamberlain, Rt. Hon. N. (Edgbaston)
Hacking, Rt. Hon. Douglas H.
Monsell, Eyres, Com. Rt. Hon. Sir B.


Chapman, Sir S.
Hanbury, C.
Moore, Sir Newton J. (Richmond)


Christie, J. A.
Hartington, Marquess of
Moore, Lieut.-Colonel T. C. R. (Ayr)


Churchill, Rt. Hon. Winston Spencer
Harvey, Major S. E. (Devon, Totnes)
O'Connor, T. J.


Cockerill, Brig.-General Sir George
Haslam, Henry C.
Ormsby-Gore, Rt. Hon. William


Colfox, Major William Philip
Henderson, Capt. R. R. (Oxf'd, Henley)
Peake, Capt. Osbert


Colville, Major D. J.
Heneage, Lieut.-Colonel Arthur P.
Penny, Sir George


Courthope, Colonel Sir G. L.
Hennessy, Major Sir G. R. J.
Peto, Sir Basil E. (Devon, Barnstaple)


Cranborne, Viscount
Herbert, Sir Dennis (Hertford)
Power, Sir John Cecil


Crookshank, Capt. H. C.
Hills, Major Rt. Hon. John Waller
Pownall, Sir Assheton


Culverwell, C. T. (Bristol, West)
Howard-Bury, Colonel C. K.
Ramsbotham, H.


Cunliffe-Lister, Rt. Hon. Sir Philip
Hunter-Weston, Lt.-Gen. Sir Aylmer
Rawson, Sir Cooper


Dalkeith, Earl of
Hurd, Percy A.
Remer, John R.


Davies, Dr. Vernon
Hurst, Sir Gerald B.
Reynolds, Col. Sir James


Ross, Major Ronald D.
Southby, Commander A. R. J.
Wardlaw-Milne, J. S.


Ruggles-Brise, Lieut.-Colonel E. A.
Spender-Clay, Colonel H.
Wells, Sydney R.


Russell, Alexander West (Tynemouth)
Stanley, Lord (Fylde)
Williams, Charles (Devon, Torquay)


Salmon, Major I.
Stanley, Maj. Hon. O. (W'morland)
Wilson, G. H. A. (Cambridge U.)


Samuel, A. M. (Surrey, Farnham)
Steel-Maitland, Rt. Hon. Sir Arthur
Windsor-Clive, Lieut.-Colonel George


Sandeman, Sir N. Stewart
Thomson, Sir F.
Withers, Sir John James


Sassoon, Rt. Hon. Sir Philip A. G. D.
Tinne, J. A.
Womersley, W. J.


Savery, S. S.
Titchfield, Major the Marquess of
Wood, Rt. Hon. Sir Kingsley


Shepperson, Sir Ernest Whittome
Todd, Capt. A. J.
Worthington-Evans, Rt. Hon. Sir L.


Skelton, A. N.
Train, J.
Young, Rt. Hon. Sir Hilton


Smith, R. W. (Aberd'n & Kinc'dine, C.)
Tryon, Rt. Hon. George Clement.



Smith-Carington, Neville W.
Turton, Robert Hugh
TELLERS FOR THE AYES.—


Smithers, Waldron
Vaughan-Morgan, Sir Kenyon
Captain Sir George Bowyer and


Somerville, A. A. (Windsor)
Ward, Lieut.-Col. Sir A. Lambert
Captain Wallace.


NOES.


Adamson, Rt. Hon. W. (Fife, West)
Gibson, H. M. (Lancs, Mossley)
Lovat-Fraser, J. A.


Adamson, W. M. (Staff., Cannock)
Gill, T. H.
Lowth, Thomas


Addison, Rt. Hon. Dr. Christopher
Gillett, George M.
Lunn, William


Altchison, Rt. Hon. Craigle M.
Glassey, A. E.
Macdonald, Gordon (Ince)


Alexander, Rt. Hon. A. V. (Hillsbro')
Gossling, A. G.
MacDonald, Rt. Hon. J. R. (Seaham)


Alpass, J. H.
Gould, F.
MacDonald, Malcolm (Bassetlaw)


Ammon, Charles George
Graham, D. M. (Lanark, Hamilton)
McElwee, A.


Arnott, John
Graham, Rt. Hon. Wm (Edin., Cent.)
McEntee, V. L.


Aske, Sir Robert
Granville, E.
MacLaren, Andrew


Attlee, Clement Richard
Gray, Milner
Maclean, Sir Donald (Cornwall, N.)


Ayles, Walter
Greenwood, Rt. Hon. A. (Colne)
Maclean, Neil (Glasgow, Govan)


Baker, John (Wolverhampton, Bilston)
Grenfell, D. R. (Glamorgan)
Macpherson, Rt. Hon. James I.


Baldwin, Oliver (Dudley)
Griffith, F. Kingsley (Middlesbro' W.)
McShane, John James


Barnes, Alfred John
Griffiths, T. (Monmouth, Pontypool)
Mander, Geoffrey le M.


Batey, Joseph
Groves, Thomas E.
Mansfield, W.


Bellamy, Albert
Grundy, Thomas W.
March, S.


Benn, Rt. Hon. Wedgwood
Hall, F. (York, W. R., Normanton)
Marcus, M.


Bennett, William (Battersea, South)
Hall, G. H. (Merthyr Tydvil)
Marley, J.


Bentham, Dr. Ethel
Hall, Capt. W. G. (Portsmouth, C.)
Marshall, Fred


Bondfield, Rt. Hon. Margaret
Hamilton, Mary Agnes (Blackburn)
Mathers, George


Bowen, J. W.
Hamilton, Sir R. (Orkney & Zetland)
Matters, L. W.


Broad, Francis Alfred
Hardle, George D.
Maxton, James


Bromfield, William
Hartshorn, Rt. Hon. Vernon
Messer, Fred


Brooke, W.
Haycock, A. W.
Middleton, G.


Brothers, M.
Hayday, Arthur
Millar, J. D.


Brown, Ernest (Leith)
Henderson, Right Hon. A. (Burnley)
Mills, J. E.


Brown, Rt. Hon. J. (South Ayrshire)
Henderson, Arthur, Junr. (Cardiff, S.)
Milner, Major J.


Brown, W. J. (Wolverhampton, West)
Henderson, Thomas (Glasgow)
Montague, Frederick


Buchanan, G.
Henderson, W. W. (Middx., Enfield)
Morgan, Dr. H. S.


Burgess, F. G.
Herriotts, J.
Morley, Ralph


Buxton, C. R. (Yorks. W. R. Elland)
Hirst, G. H. (York W. R. Wentworth)
Morris, Rhys Hopkins


Calne, Derwent Hall-
Hirst, W. (Bradford, South)
Morris-Jones, Dr. J. H. (Denbigh)


Cameron, A. G.
Hoffman, P. C.
Morrison, Robert C. (Tottenham, N.)


Cape, Thomas
Hopkin, Daniel
Mort, D. L.


Carter, W. (St. Pancras, S. W.)
Horrabin, J. F.
Moses, J. J. H.


Charleton, H. C.
Hudson, James H. (Huddersfield)
Muggeridge, H. T.


Chater, Daniel
Hunter, Dr. Joseph
Murnin, Hugh


Church, Major A. G.
Isaacs, George
Nathan, Major H. L.


Clarke, J. S.
John, William (Rhondda, West)
Naylor, T. E.


Cluse, W. S.
Johnston, Thomas
Newman, Sir R. H. S. D. L. (Exeter)


Clynes, Rt. Hon. John R.
Jones, F. Llewellyn- (Flint)
Noel Baker, P. J.


Cocks, Frederick Seymour
Jones, Rt. Hon. Leif (Camborne)
Noel-Buxton, Baroness (Norfolk, N.)


Compton, Joseph
Jones, Morgan (Caerphilly)
Oldfield, J. R.


Cove, William G.
Jowett, Rt. Hon. F. W.
Oliver, George Harold (Ilkeston)


Cowan, D. M.
Jowitt, Sir W. A. (Preston)
Oliver, P. M. (Man., Blackley)


Daggar, George
Kelly, W. T.
Owen, Major G. (Carnarvon)


Dallas, George
Kennedy, Thomas
Palln, John Henry


Dalton, Hugh
Kenworthy Lt.-Com. Hon. Joseph M.
Paling, Wilfrid


Davies, Rhys John (Westhoughton)
Knight, Holford
Parkinson, John Allen (Wigan)


Day, Harry
Lambert, Rt. Hon. George (S. Molton)
Perry, S. F.


Denman, Hon. R. D.
Lang, Gordon
Pethick-Lawrence, F. W.


Dickson, T.
Lansbury, Rt. Hon. George
Phillips, Dr. Marion


Dudgeon, Major C. R.
Lathan, G.
Picton-Turbervill, Edith


Dukes, C.
Law, Albert (Bolton)
Pole, Major D. G.


Duncan, Charles
Law, A. (Rosendale)
Potts, John S.


Ede, James Chuter
Lawrence, Susan
Price, M. P.


Edmunds, J. E.
Lawrie, Hugh Hartley (Stalybridge)
Quibell, D. F. K.


Edwards, C. (Monmouth, Bedwellty)
Lawson, John James
Ramsay, T. B. Wilson


Edwards, E. (Morpeth)
Lawther, W. (Barnard Castle)
Rathbone, Eleanor


Egan, W. H.
Leach, W.
Raynes, W. R.


England, Colonel A.
Lee, Frank (Derby, N. E.)
Richards, R.


Forgan, Dr. Robert
Lee, Jennie (Lanark, Northern)
Richardson, R. (Houghton-le-Spring)


Freeman, Peter
Lindley, Fred W.
Riley, Ben (Dewsbury)


Gardner, B. W. (West Ham, Upton)
Lloyd, C. Ellis
Riley, F. F. (Stockton-on-Tees)


Gardner, J. P. (Hammersmith, N.)
Logan, David Gilbert
Ritson, J.


George, Major G. Lloyd (Pembroke)
Longbottom, A. W.
Roberts, Rt. Hon. F. O. (W. Bromwich)


Gibbins, Joseph
Longden, F.
Romeril, H. G.




Rosbotham, D. S. T.
Smith, Rennie (Penistone)
Wallace, H. W.


Rowson, Guy
Smith, Tom (Pontefract)
Wallhead, Richard C.


Salter, Dr. Alfred
Smith, W. R. (Norwich)
Watkins, F. C.


Samuel, Rt. Hon. Sir H. (Darwen)
Snell, Harry
Watson, W. M. (Dunfermline)


Samuel, H. Walter (Swansea, West)
Snowden, Rt. Hon. Philip
Wedgwood, Rt. Hon. Josiah


Sanders, W. S.
Snowden, Thomas (Accrington)
Wellock, Wilfred


Sandham, E.
Stamford, Thomas W.
West, F. R.


Sawyer, G. F.
Stephen, Campbell
Westwood, Joseph


Scurr, John
Stewart, J. (St. Rollox)
Whiteley, Wilfrid (Birm., Ladywood)


Sexton, James
Strachey, E. J. St. Loe
Wilkinson, Ellen C.


Shaw, Rt. Hon. Thomas (Preston)
Strauss, G. R.
Williams, David (Swansea, East)


Shield, George William
Sullivan, J.
Williams, Dr. J. H. (Llanelly)


Shiels, Dr. Drummond
Sutton, J. E.
Williams, T. (York, Don Valley)


Shillaker, J. F.
Taylor R. A. (Lincoln)
Wilson, C. H. (Sheffield, Attercliffe)


Shinwell, E.
Taylor, W. B. (Norfolk, S. W.)
Wilson, J. (Oldham)


Short, Alfred (Wednesbury)
Thomas, Rt. Hon. J. H. (Derby)
Wilson, R. J. (Jarrow)


Simmons, C. J.
Thorne, W. (West Ham, Plaistow)
Winterton, G. E. (Leicester, Loughb'gh)


Simon, E. D. (Manch'ter, Withington)
Tillett, Ben
Wise, E. F.


Simon, Rt. Hon. Sir John
Tinker, John Joseph
Wood, Major McKenzie (Banff)


Sinclair, Sir A. (Caithness)
Tout, W. J.
Wright, W. (Rutherglen)


Sinkinson, George
Townend, A. E.



Sitch, Charles H.
Trevelyan, Rt. Hon. Sir Charles
TELLERS FOR THE NOES.—


Smith, Ben (Bermondsey, Rotherhithe)
Viant, S. P.
Mr. Hayes and Mr. William


Smith, Frank (Nuneaton)
Walkden, A. G.
Whiteley.


Smith, H. B. Lees- (Keighley)
Walker, J.



Question, "That the Clause be read a Second time," put, and agreed to.

NEW CLAUSE.—(Amendment of 8 and 9 Geo. 5, c. 40, Schedule A.)

The following paragraph shall be added to Schedule A, No. VIII, of the Income Tax Act, 1918:—
12. No claimant for repayment or allowance of tax under this rule shall be entitled to claim or be allowed repayment or allowance of tax unless and until he shall produce to the person from whom he is claiming repayment or allowance a receipt or certificate to prove that he has paid or suffered the tax, repayment, or allowance for which he is claiming."—[Major Hills.]

Brought up, and read the First time.

Major HILLS: I beg to move, "That the Clause be read a Second time."
Since I put down this new Clause, I have had an opportunity of discussing it with the Chancellor of the Exchequer, who has convinced me that, though there is a flaw to the Act of 1918, this new Clause is not the best way of meeting that difficulty. Therefore, I formally move, and I understand that the Chancellor of the Exchequer will make a statement that will meet the point that I raise.

Captain BOURNE: I beg to second the Motion.

Mr. P. SNOWDEN: The right hon. and gallant Gentleman (Major Hills) raised this question in Committee, and I promise to take it into consideration. As he has stated, we have had the matter under review, and we are agreed that the point which the right hon. and gallant Gentleman raises is one of substance. But this new Clause which he proposes, while it goes far enough in one direction, does not go sufficiently far in
another. I am quite willing to keep the matter open and to see what can be done. I propose to refer it for consideration to the Committee which is at present engaged in codifying the Income Tax Law.

Motion and Clause, by leave, withdrawn.

NEW CLAUSE.—(Relief in respect of unoccupied tenements in houses let in different tenements.)

If, on an application made to the Commissioners of Inland Revenue not later than twelve months after the end of any year of assessment it is shown to the satisfaction of the said Commissioners that any apartment or tenement in any house or building let in different apartments or tenements and occupied by two or more persons severally was unoccupied during that year or any part of that year, the said Commissioners shall cause such relief to be given from tax charged under Schedule A in respect of that house or building as appears to them to be just and shall, where necessary, direct repayment to be made of any tax which has been overpaid.—[Mr. Smithers.]

Brought up, and read the First time.

Mr. SMITHERS: I beg to move, "That the Clause be read a Second time."
This proposed new Clause has arisen because of the new system of valuation in the Metropolis. Hitherto, the valuation for assessments has been taken from the valuation which has been laid down by the rating authorities. In the City, and elsewhere over the country, there are large houses let in various tenements and apartments, and it does not seem fair that if one of these suites in a large building is empty for a year or part of
a year, Income Tax under Schedule A should be paid for that part of the building. I raised this point on the Committee stage, and the Chancellor of the Exchequer was good enough to say that he would took into it before the Report stage. He has allowed me to have an interview with the Inland Revenue authorities, and I should like to tender my thanks for the courteous way in which they treated me. I understood that if I moved this new Clause, the Chancellor of the Exchequer would give it sympathetic consideration.

Mr. CHARLES WILLIAMS: I beg to second the Motion.

Mr. P. SNOWDEN: As the hon. Gentleman has said, I promised him on the Committee stage to look into this matter. A conference has taken place between the officials of the Inland Revenue and the Department, and this is an agreed Clause, which I have pleasure in accepting.

Mr. SMITHERS: May I thank the Chancellor of the Exchequer.

Clause added to the Bill.

NEW CLAUSE.—(Earned income relief in respect of royalties received by inventors.)

Sub-section (3) of section fourteen of the Income Tax Act, 1918, shall be amended by adding at the end thereof the following words:
(d) any royalty or other sum paid in respect of the user of a patent where such patent has been taken out by the receiver of such royalty or other sum and is for an invention of his own and is still owned by him;
and sub-section (1) of section fifteen of the Finance Act, 1925, shall be amended by adding at the end thereof the following words:
and any individual making a claim and return as above who has received royalties or other sums as set out in section fourteen, sub-section (3) (d), of the Income Tax Act, 1918, under deduction of income tax, shall be entitled to such repayment of income tax as represents tax on one-sixth of the gross amount of such royalties or other sums, but not exceeding, together with any other yarned income relief to which he is entitled, two hundred and fifty pounds."—[Sir H. Buckingham.]

Brought up, and read the First time.

Sir HENRY BUCKINGHAM: I beg to move, "That the Clause be read a Second time."
This is quite a small matter because it affects only a tiny class of the population, and the amount of tax involved is infinitesimal. The Clause is drafted in a somewhat technical manner, but the side note makes clear its intentions; that is to say, earned income relief is to be given in respect of royalties received by inventors. This is a new point and is not one of the hardy annuals that come before the House. As far as I know, it is the first time that it has been raised. It applies to the very few people who have the brains and ingenuity to create inventions, which are so frequently the basis of our commercial success. Therefore this small class is one that should receive generous treatment. The position to-day is that an inventor, if he lets out his patnet on royalties, does not get any relief on account of earned income from those royalties. In other words, the royalties from patents which remain in the patentees' hands are not ranked as earned income. That is because under Section 14 of the Income. Tax Act, 1918, though the definition of earned income is very clearly expressed, unfortunately the royalties received by people who have invented patents are not included under any part of that definition. I think that it will be obvious to the Chancellor and to the House that this class of person should certainly receive the benefit of the income derived from the exercise of their ingenuity. The income derived from a patent is just as much earned income as any other earned income can possibly be, and I do not think that the Chancellor will be able to resist in principle my suggestion that this income should be treated in that manner.
I know that there may be a technical difficulty in consequence of a legal decision given some years ago that a patent is property, and that the income derived from it is income derived from property, and cannot be estimated as earned income. That decision, however, was not given in connection with any Income Tax law, but, in connection with a case dealing with Excess Profits Duty. Therefore the principle still remains, that income from patents which remain in the hands of the patentee should certainly
be considered as earned income. I hope that the House will not misunderstand me, and will not think that I am appealing on behalf of those people who deal in patents. They are quite a different class of people; their business is to exploit the ingenuity of the original patentee. It is an anomaly that the people who deal in other peoples' patents are able to get the earned income allowance on the profits of their business, whereas the original patentee, who may be keeping his patent in his own hands, and who is letting it out on licence to other people, is deprived of any benefit in that respect. I hope that the Chancellor of the Exchequer will accept this very modest suggestion, because I cannot conceive that it will cost the Treasury very much.

Sir HILTON YOUNG: I beg to second the Motion.
I commend this new Clause to the attention of the Chancellor as undoubtedly a step in the right direction as regards putting some common sense into the region of Income Tax law, in which that quality is all too deficient. The whole differentiation between earned income and unearned income is full of anomalies, and there is no region of our taxing law as regards the basis of Income Tax which is more full of injustice and has less relation to any sort of scientific principle. The special value of this interesting new Clause is to show up what kind of anomalies there are in this region of the law. What could be a clearer case on the justice of the matter? Here is the inventor, a man who lives by his brain, and lives in a very precarious manner by his brain, because he might make only one invention in the course of the year, and he might make only one in the course of his life. He has to live on it, and according to the modern methods of finance, the only possible return that he can get from it is in the form of royalties on the sale of the invention. There is in practice no other method by which he can bring home the reward of his invention.
What stands in the decision in Sangster's case? Although I do not question the law of the learned Judge in deciding that case, it is a most astonishing and anomalous decision, because it
was decided that the royalties, which are the only possible way in which the inventor can realise his work, are not earned, but are unearned income. There is no other conceivable way in which the earnings of the invention can be brought home to him. It might probably be argued that some part of the royalties are a return upon property, but how it can possibly be said in common sense that the whole of the royalties are a return upon property or an investment really staggers one to understand. A royalty is not a perpetual investment. A patent has only a limited term of years and it runs out. Further, the life of an invention is very often less than the life of a patent; its success on the market may run for only a year or two, and in the course of that year or two, even in accordance with the strict interpretation of the position, the royalty owner has to replace his capital from income. So on any interpretation, however harsh, the whole of the royalties cannot be looked upon as a return on an investment, and the only common-sense view is that in fact and in substance no part of the royalty is anything but earned income, and the only form of income that can be earned by this most important contribution to the welfare of the commercial and industrial community. Taking this view, we very much hope that the Chancellor will be able to hold out some concession for the benefit of this most deserving class of people.

The FINANCIAL SECRETARY to the TREASURY (Mr. Pethick-Lawrence): The hon. Gentleman who moved, and the righ hon. Gentleman who seconded the Motion, certainly put forward a very powerful case on behalf of the new Clause. I am quite prepared to admit that in the way they have represented it there seems to be a great, deal to be said for it. There is another side, however, which presents the matter in a somewhat different light. When a man makes an invention, he has two courses open to him—either to let out the patent rights by royalty, or to sell his patent outright. The Inland Revenue have to take one view or the other. If a man who is in the habit of making inventions sells them outright, the present view of the Inland Revenue is that that is not income for the purposes of the Income Tax law, and therefore the
Revenue do not charge Income Tax on the sales. They treat the sale of the patent outright as a sale of capital, and it escapes Income Tax thereon. If the contention that has been made on behalf of this new Clause were to hold good that practice would have to be changed, and in that case it would be necessary to treat as income any sale outright of a patent. Under the Clause as it stands, the whole advantage will go to the taxpayer, but, if we were to alter the stand which is at present taken, which regards a patent as a piece of capital, clearly the taxpayer could not have it both ways, and he would have to be subject to Income Tax on the sale of his patent outright.
Another difficulty arises. You would get a very curious position in this way. When a patentee sells his patent to another man, that man lets it out on royalties, and I understand that the Mover and Seconder of this Motion do not propose that he shall be subject to the earned income allowance. I think that that would be rather an anomaly, because obviously you are treating it as capital in the one case, and not treating it as capital in another. This matter did come before the Royal Commission on Income Tax. The point put to them was that although royalties received by an author are treated as earned income, royalties paid for the use of a patent are treated as investment income; but in spite of that representation, which was ably put before the Commission, they reported that they saw no reason to recommend any change.

Mr. ALBERY: Will the hon. Gentleman also tell us the position in the case of an author who sells his work instead of taking royalties on it?

Mr. PETHICK-LAWRENCE: I think I am right in saying that if an author sells his work the money is treated as income. [Interruption.] If I am wrong I shall be corected, and perhaps I had better verify that statement. [Interruption.] Now I am told that I am right; but I will make quite sure. My impression is that an author who obtains an income either by selling his works outright or from royalties on them is bound to pay Income Tax on it. He is treated worse. An author selling his book outright has to pay Income Tax on the money as income,
but an inventor selling his patent outright does not have to treat the money as income at all; it is regarded as capital. That is the great distinction. The author gains in some ways and the inventor gains in other ways. The Royal Commission, reporting in 1920, saw no reason to recommend any change, and I do not suppose there are any new facts to-day which alter the situation from what it was in 1920; but my right hon. Friend has asked me to say that he will certainly look into this matter, not, of course, with the idea of altering the provisions in the current Bill, because that would not be possible; but he certainly will have this matter thoroughly examined, and if he finds that there is good reason for making any change he will not hesitate to recommend it, unless it involves any large loss of revenue, which he thinks is unlikely. If he finds it desirable to make a change he will not hesitate to make certain proposition in next year's Bill, but as he is at present advised, and taking into account the recommendations of the Royal Commission, he thinks the law had better be left as it is.

Mr. ALBERY: I am glad to hear that this matter is to be looked into. I cannot see that there is any difference between the royalties which an author gets on a book and the purchase price which he gets for the sale outright, and the sale of an invention and the royalties received for that invention.

Sir H. BUCKINGHAM: In view of the statement of the Financial Secretary I beg to ask leave to withdraw the Motion.

Motion and Clause, by leave, withdrawn.

NEW CLAUSE.—(Relief from duty on hydro-carbon oils.)

Section two of the Finance Act, 1928, shall be amended by the addition to subsection (8) after the words "in respect of the oil so used" of the following words:—
or in the case of a person using hydrocarbon oil as the raw material of his manufacture or as an element in the process of manufacture he may make application for relief to the commissioners, and if it appears to the satisfaction of the commissioners that the applicant has at any time within the period of twelve months or such lesser period for which his accounts have last been made up used any quantity of hydro-carbon oil, either as a raw material or in the process of manufacture, he shall be entitled to obtain from the
commissioners repayment of any duty which has been paid in respect of the oil so consumed, so however that no person shall receive repayment both under this sub-section and by way of drawback under sub-section six in respect of the same hydro-carbon oils."—[Sir A. Lambert Ward.]

Brought up, and read the First time.

Lieut.-Colonel Sir A. LAMBERT WARD: I beg to move, "That the Clause be read a Second time."
This new Clause, which was debated in Committee, has been put down with the idea of helping paint and varnish firms, particularly in the North of England, who are now subject to the duty on these hydro-carbon oils in respect of the turpentine and white spirit they use. It is a definite tax on a raw material of their industry, and with trade as it is and with unemployment increasing on every hand a tax on the raw material of an industry is a very serious thing indeed. This new Clause would give power to the Treasury to allow a rebate on any quantity of hydro-carbon oil or any similar material which a manufacturer can prove has been used as a raw material in the manufacture of an article. The articles which are principally covered by this new Clause are white spirit and turpentine. The duty upon these oils was imposed two years ago as part of the scheme for financing the de-rating Bill. While I admit that that Measure did require financing to a very considerable extent, the money has been largely provided by the duty on petrol which is used in internal combustion engines and for other purposes, and we feel that the users of these two raw materials, turpentine and white spirit, which cannot be a substitute for petrol in internal combustion engines, should be placed in the position where they can recover from the Treasury the duty upon such quantities of them as they have converted into manufactured articles. When the duty was originally imposed it was thought that it would be possible for manufacturers to recover the cost of it from consumers, but in practice that has proved not to be the case, and the duty is a burden on the industry.

Mr. MARJORIBANKS: I beg to second the Motion.

Mr. P. SNOWDEN: This Clause is, in terms, identical with the Clause which was rejected by the Committee without a Division. We had a quite interesting and,
shall I say friendly, debate on the subject, and I was then unable to accept the Clause, or the Amendment which proposed to exempt turpentine and white spirit from the operation of the Petrol Duty. On that occasion I expressed no enthusiasm for the Petrol Duties as a whole, but I was compelled to resist the Amendment on two grounds, first, that the cost of the proposal would amount to £500,000 a year, and, secondly, because of the administrative difficulties in the way of giving a rebate. The objections which I rather regretfully had to put before the Committee will have to be expressed with equal reluctance to-day, but I hope the time may come when the finances of the country are in a better state and we may be in a position to reconsider the appeal which has been made to us.

Mr. WOMERSLEY: I regret very much to hear the Chancellor's decision on this question, because it does affect a large number of trades in this country which could do with a little stimulus. This new Clause is based upon one which was inserted in the Finance Act of 1928 to deal with the exemption from the Petrol Duty of petrol used in the fishing industry. It has been suggested that evasion presents a difficult problem, and I know from what I have been told by revenue officers that when there was a duty on petrol previously there was considerable difficulty in dealing with exemptions which were granted in the case of petrol used by certain industrial concerns; but I was hopeful that this Clause might meet with the approval of the Chancellor. I quite agree that the consideration of cost is a serious one at the moment. However, if the right hon. Gentleman, in presenting his next Budget, will give favourable consideration to the grant of relief to the industries affected, that will be regarded by them as something better than meeting with a blank refusal. Those engaged in those industries feel that it is a hardship upon them to have to pay this duty. When Parliament agreed to impose the Petrol Duty it was not realised that we were going to tax these industries as well as those who used petrol in internal combustion engines. Little by little we hope to get these industries freed from the vexatious tax, and if the Cancellor will give this question very sympathetic
consideration those on whose behalf I am speaking will feel a little more satisfaction than if they met with a blank refusal.

Question put, "That the Clause be read a Second time."

The House divided: Ayes, 153: Noes, 268.

Division No. 439.]
AYES.
[5.43 p.m.


Acland-Troyte, Lieut.-Colonel
Gilmour, Lt.-Col. Rt. Hon. Sir John
Pilditch, Sir Philip


Albery, Irving James
Gower, Sir Robert
Power, Sir John Cecil


Allen, Sir J. Sandeman (Liverp'l., W.)
Grace, John
Pownall, Sir Assheton


Allen, Lt.-Col. Sir William (Armagh)
Graham, Fergus (Cumberland, N.)
Ramsbotham, H.


Aske, Sir Robert
Grattan-Doyle, Sir N.
Rawson, Sir Cooper


Atkinson, C.
Gretton, Colonel Rt. Hon. John
Reid, David D. (County Down)


Baldwin, Rt. Hon. Stanley (Bewdley)
Gritten, W. G. Howard
Remer, John R.


Balniel, Lord
Guinness, Rt. Hon. Walter E.
Reynolds, Col. Sir James


Beamish, Rear-Admiral T. P. H.
Gunston, Captain D. W.
Rodd, Rt. Hon. Sir James Rennell


Betterton, Sir Henry B.
Hacking, Rt. Hon. Douglas H.
Ross, Major Ronald D.


Bird, Ernest Roy
Hall, Lieut.-Col. Sir F. (Dulwich)
Ruggles-Brise, Lieut.-Colonel E. A.


Bourne, Captain Robert Croft
Hanbury, C.
Russell, Alexander West (Tynemouth)


Briscoe, Richard George
Hartington, Marquess of
Salmon, Major I.


Brown, Col. D. C. (N'th'l'd., Hexham)
Harvey, Major S. E. (Devon, Totnes)
Samuel, A. M. (Surrey, Farnham)


Brown, Ernest (Leith)
Henderson, Capt. R. R. (Oxf'd, Henley)
Sandeman, Sir N. Stewart


Brown, Brig.-Gen. H. C. (Berks, Newb'y)
Heneage, Lieut.-Colonel Arthur P.
Sassoon, Rt. Hon. Sir Philip A. G. D.


Buchan, John
Herbert, Sir Dennis (Hertford)
Savery, S. S.


Buckingham, Sir H.
Hills, Major Rt. Hon. John Waller
Shepperson, Sir Ernest Whittome


Cadogan, Major Hon. Edward
Howard-Bury, Colonel C. K.
Skelton, A. N.


Cayzer, Sir C. (Chester, City)
Hunter, Dr. Joseph
Smith, R. W. (Aberd'n & Kinc'dine, C.)


Chamberlain, Rt. Hn. Sir J. A. (Birm., W.)
Hurd, Percy A.
Smithers, Waldron


Chamberlain, Rt. Hon. N. (Edgbaston)
Hurst, Sir Gerald B.
Somerville, A. A. (Windsor)


Chapman, Sir S.
Iveagh, Countess of
Southby, Commander A. R. J.


Christie, J. A.
King, Commodore Rt. Hon. Henry D.
Spender-Clay, Colonel H.


Cobb, Sir Cyril
Knox, Sir Alfred
Stanley, Lord (Fylde)


Cockerill, Brig.-General Sir George
Lamb, Sir J. Q.
Stanley, Maj. Hon. O. (W'morland)


Colfox, Major William Philip
Lane Fox, Col. Rt. Hon. George R.
Steel-Maitland, Rt. Hon. Sir Arthur


Colman, N. C. D.
Law, Sir Alfred (Derby, High Peak)
Thomson, Sir F.


Colville, Major D. J.
Leighton, Major B. E. P.
Tinne, J. A.


Courthope, Colonel Sir G. L.
Lewis, Oswald (Colchester)
Titchfield, Major the Marquess of


Cowan, D. M.
Locker-Lampson, Rt. Hon. Godfrey
Todd, Capt. A. J.


Cranborne, Viscount
Long, Major Eric
Train, J.


Crookshank, Capt. H. C.
Lymington, Viscount
Tryon, Rt. Hon. George Clement.


Culverwell, C. T. (Bristol, West)
McConnell, Sir Joseph
Turton, Robert Hugh


Cunliffe-Lister, Rt. Hon. Sir Philip
Macdonald, Capt. P. D. (I. of W.)
Vaughan-Morgan, Sir Kenyon


Dalkeith, Earl of
Macpherson, Rt. Hon. James I.
Wallace, Capt. D. E. (Hornsey)


Dalrymple-White, Lt.-Col. Sir Godfrey
Macquisten, F. A.
Ward, Lieut.-Col. Sir A. Lambert


Davies, Dr. Vernon
MacRobert, Rt. Hon. Alexander M.
Wardlaw-Milne, J. S.


Dawson Sir Philip
Makins, Brigadier-General E.
Waterhouse, Captain Charles


Duckworth, G. A. V.
Marqesson, Captain H. D.
Wells, Sydney R.


Dugdale, Capt. T. L.
Marjoribanks, E. C.
Williams, Charles (Devon, Torquay)


Eden, Captain Anthony
Meller, R. J.
Wilson, G. H. A. (Cambridge U.)


Edmondson, Major A. J.
Merriman, Sir F. Boyd
Windsor-Clive, Lieut.-Colonel George


Elliot, Major Walter E.
Mitchell, Sir W. Lane (Streatham)
Winterton, G. E. (Leicester, Loughb'gh)


England, Colonel A.
Mitchell-Thomson, Rt. Hon. Sir W.
Withers, Sir John James


Erskine, Lord (Somerset, Weston-s. M.)
Monsell, Eyres, Com. Rt. Hon. Sir B.
Womersley, W. J.


Falle, Sir Bertram G.
O'Connor, T. J.
Wood, Rt. Hon. Sir Kingsley


Ferguson, Sir John
Oliver, P. M. (Man., Blackley)
Worthington-Evans, Rt. Hon. Sir L.


Ferguson, Lord
Ormsby-Gore, Rt. Hon. William
Young, Rt. Hon. Sir Hilton


Galbraith, J. F. W.
Peake, Captain Osbert



Ganzoni, Sir John
Penny, Sir George
TELLERS FOR THE AYES.—


Gibson, C. G. (Pudsey & Otley)
Poto, Sir Basil E. (Devon, Barnstaple)
Major Sir George Hennessy and




Captain Sir George Bowyer.


NOES.


Adamson, Rt. Hon. W. (Fife, West)
Bondfield, Rt. Hon. Margaret
Chater, Daniel


Adamson, W. M. (Staff., Cannock)
Bowen, J. W.
Church, Major A. G.


Addison, Rt. Hon. Dr. Christopher
Bowerman, Rt. Hon. Charles W.
Clarke, J. S.


Aitchison, Rt. Hon. Craigie M.
Broad, Francis Alfred
Cluse, W. S.


Alexander, Rt. Hon. A. V. (Hillsbro')
Bromfield, William
Clynes, Rt. Hon. John R.


Alpass, J. H.
Bromley, J.
Cocks, Frederick Seymour


Ammon, Charles George
Brooke, W.
Compton, Joseph


Arnott, John
Brothers, M.
Cove, William G.


Attlee, Clement Richard
Brown, C. W. E. (Notts, Mansfield)
Daggar, George


Ayles, Walter
Brown, Rt. Hon. J. (South Ayrshire)
Dallas, George


Baker, John (Wolverhampton, Bilston)
Brown, W. J. (Wolverhampton, West)
Dalton, Hugh


Baldwin, Oliver (Dudley)
Buchanan, G.
Davies, E. C. (Montgomery)


Barnes, Alfred John
Burgess, F. G.
Davies, Rhys John (Westhoughton)


Batey, Joseph
Buxton, C. B. (Yorks, W. R. Elland)
Day, Harry


Bellamy, Albert
Calne, Derwent Hall-
Dickson, T.


Benn, Rt. Hon. Wedgwood
Cameron, A. G.
Dudgeon, Major C. R.


Bennett, Capt. Sir E. N. (Cardiff C.)
Cape, Thomas
Dukes, C.


Bennett, William (Battersea, South)
Carter, W. (St. Pancras, S. W.)
Duncan, Charles


Bentham, Dr. Ethel
Charleton, H. C.
Ede, James Chuter


Edmunds, J. E.
Logan, David Gilbert
Sanders, W. S.


Edwards, E. (Morpeth)
Longbottom, A. W.
Sandham, E.


Egan, W. H.
Longden, F.
Sawyer, G. F.


Evans, Capt. Ernest (Welsh Univer.)
Lovat-Fraser, J. A.
Scrymgeour, E.


Forgan, Dr. Robert
Lowth, Thomas
Scurr, John


Freeman, Peter
Lunn, William
Sexton, James


Gardner, B. W. (West Ham, Upton)
Macdonald, Gordon (Ince)
Shaw, Rt. Hon. Thomas (Preston)


Gardner, J. P. (Hammersmith, N.)
MacDonald, Rt. Hon. J. R. (Seaham)
Sherwood, G. H.


George, Major G. Lloyd (Pembroke)
MacDonald, Malcolm (Bassetlaw)
Shield, George William


George, Megan Lloyd (Anglesea)
McElwee, A.
Shiels, Dr. Drummond


Gibbins, Joseph
McEntee, V. L.
Shillaker, J. F.


Gibson, H. M. (Lancs, Mossley)
MacLaren, Andrew
Shinwell, E.


Gill, T. H.
Maclean, Neil (Glasgow, Govan)
Short, Alfred (Wednesbury)


Gillett, George M.
McShane, John James
Simmons, C. J.


Glassey, A. E.
Mander, Geoffrey le M.
Simon, E. D. (Manch'ter, Withington)


Gossling, A. G.
Mansfield, W.
Simon, Rt. Hon. Sir John


Gould, F.
March, S.
Sinclair, Sir A. (Caithness)


Graham, D. M. (Lanark, Hamilton)
Marcus, M.
Sinkinson, George


Graham, Rt. Hon. Wm. (Edin., Cent.)
Markham, S. F.
Sitch, Charles H.


Granville, E.
Marley, J.
Smith, Ben (Bermondsey, Rotherhithe)


Gray, Milner
Marshall, Fred
Smith, Frank (Nuneaton)


Greenwood, Rt. Hon. A. (Colne)
Mathers, George
Smith, H. B. Lees- (Keighley)


Grenfell, D. R. (Glamorgan)
Matters, L. W.
Smith, Rennie (Penistone)


Griffiths, F. Kingsley (Middlesbro' W.)
Maxton, James
Smith, Tom (Pontefract)


Griffiths, T. (Monmouth, Pontypool)
Messer, Fred
Smith, W. R. (Norwich)


Groves, Thomas E.
Middleton, G.
Snell, Harry


Grundy, Thomas W.
Millar, J. D.
Snowden, Rt. Hon. Philip


Hall, F. (York, W. R., Normanton)
Mills, J. E.
Snowden, Thomas (Accrington)


Hall, G. H. (Merthyr Tydvil)
Milner, Major J.
Stamford, Thomas W.


Hall, Capt. W. G. (Portsmouth, C.)
Montague, Frederick
Stephen, Campbell


Hamilton, Mary Agnes (Blackburn)
Morgan, Dr. H. B.
Stewart, J. (St. Rollox)


Hamilton, Sir R. (Orkney & Zetland)
Morley, Ralph
Strauss, G. R.


Hardie, George D.
Morris, Rhys Hopkins
Sullivan, J.


Harris, Percy A.
Morris-Jones, Dr. J. H. (Denbigh)
Sutton, J. E.


Haycock, A. W.
Morrison, Robert C. (Tottenham, N.)
Taylor, R. A. (Lincoln)


Hayday, Arthur
Mort, D. L.
Taylor, W. B. (Norfolk, S. W.)


Henderson, Right Hon. A. (Burnley)
Moses, J. J. H.
Thomas, Rt. Hon. J. H. (Derby)


Henderson, Arthur, Junr. (Cardiff, S.)
Muggeridge, H. T.
Thorne, W. (West Ham, Plaistow)


Henderson, Thomas (Glasgow)
Murnin, Hugh
Tillett, Ben


Henderson, W. W. (Middx., Enfield)
Nathan, Major H. L.
Tinker, John Joseph


Herriotts, J.
Naylor, T. E.
Toole, Joseph


Hirst, G. H. (York W. R. Wentworth)
Newman, Sir R. H. S. D. L. (Exeter)
Tout, W. J.


Hirst, W. (Bradford, South)
Noel Baker. P. J.
Townend, A. E.


Hoffman, P. C.
Noel-Buxton, Baroness (Norfolk, N.)
Viant, S. P.


Hopkin, Daniel
Oldfield, J. R.
Walkden, A. G.


Horrabin, J. F.
Oliver, George Harold (Ilkeston)
Walker, J.


Hudson, James H. (Huddersfield)
Owen, Major G. (Carnarvon)
Wallace, H. W.


Hutchison, Maj.-Gen. Sir R.
Palin, John Henry.
Wallhead, Richard C.


Isaacs, George
Paling, Wilfrid
Watkins, F. C.


John, William (Rhondda, West)
Parkinson, John Allen (Wigan)
Watson, W. M. (Dunlermline)


Johnston, Thomas
Perry, S. F.
Wellock, Wilfred


Jones, Rt. Hon. Leif (Camborne)
Pethick-Lawrence, F. W.
Welsh, James (Paisley)


Jones, Morgan (Caerphilly)
Phillips, Dr. Marion
West, F. R.


Jones, T. I. Mardy (pontypridd)
Picton-Turbervill, Edith
Westwood, Joseph


Jowett, Rt. Hon. F. W.
Pole, Major D. G.
Whiteley, Wilfrid (Birm., Ladywood)


Jowitt, Sir W. A. (Preston)
Potts, John S.
Whiteley, William (Blaydon)


Kelly, W. T.
Price, M. P.
Wilkinson, Ellen C.


Kennedy, Thomas
Quibell, D. J. K.
Williams, David (Swansea, East)


Knight, Holford
Ramsay, T. B. Wilson
Williams, Dr. J. H. (Llanelly)


Lambert, Rt. Hon. George (S. Molton)
Rathbone, Eleanor
Williams, T. (York, Don Valley)


Lang, Gordon
Raynes, W. R.
Wilson, C. H. (Sheffield, Attercliffe)


Lansbury, Rt. Hon. George
Richards, R.
Wilson, J. (Oldham)


Lathan, G.
Richardson, R. (Houghton-le-Spring)
Wilson, R. J. (Jarrow)


Law, Albert (Bolton)
Riley, Ben (Dewsbury)
Winterton, G. E. (Leicester, Loughb'gh)


Law, A. (Rosendale)
Riley, F. F. (Stockton-on-Tees)
Wise, E. F.


Lawrence, Susan
Ritson, J.
Wood, Major McKenzie (Banff)


Lawrie, Hugh Hartley (Stalybridge)
Roberts, Rt. Hon. F. O. (W. Bromwich)
Wright, W. (Rutherglen)


Lawther, W. (Barnard Castle)
Romeril, H. G.



Leach, W.
Rosbotham, D. S. T.
TELLERS FOR THE NOES.—


Lee, Frank (Derby, N. E.)
Rowson, Guy
Mr. Charles Edwards and Mr.


Lindley, Fred W.
Salter, Dr. Alfred
Hayes.


Lloyd, C. Ellis
Samuel, H. Walter (Swansea, West)

NEW CLAUSE.—(Relief to money expended on plant or machinery.)

For the purpose of calculating the annual profits or gains arising or accruing from any trade, profession, employment, or vocation, there shall be deducted in each of the three accounting periods following the sixth day of April, nineteen hundred and thirty, any sums which, to the satisfaction of the Commissioners
by whom the assessment is made, can be proved to have been expended upon the purchase, installation, erection, or improvement of plant or machinery with a view to the reconditioning, re-equipment, modernisation, or improvement of such plant or machinery: Provided always that if recourse is had to the benefits conferred by this section, no claim shall be entertained by the Commissioners in respect of the
diminished value by reason of wear and tear of the said plant and machinery to the extent of any deduction allowed hereunder.—[Mr. Churchill.]

Brought up, and read the First time.

Mr. CHURCHILL: I beg to move, "That the Clause be read a Second time."
I do not observe the right hon. Gentleman the Member for Carnarvon Boroughs (Mr. Lloyd George) in his place on this occasion. I had hoped that he would have been present again to support by his powerful and picturesque oratory the important proposal contained in this new Clause. It may not have escaped your notice, Mr. Deputy Speaker, that a considerable amount of excitement was caused when this matter came before the House on the last occasion, and the proposal received a remarkable measure of support on this side of the House—in fact one may say that it very nearly commanded a majority of the present House of Commons. The Chancellor of the Exchequer, when speaking upon this proposal on that occasion, hold out hopes to the right hon. Gentleman the Member for Carnarvon Boroughs that he would consider some proposal based on the lines of this new Clause although expressed in a different way. The principle of this proposal is that we should endeavour to give the strongest encouragement to industry by relieving it of the heavy burdens which press upon it to-day, and which have such a disastrous effect upon employment.
I was very much impressed with the argument used by the right hon. Gentleman the Member for Carnarvon Boroughs when he pointed out how many experiments were being tried to relieve unemployment, and how large sums of money were being disbursed with that object without much chance of success. The right hon. Gentleman pointed out that the assent of the majority of the Liberal party had been obtained for such a proposal as that contained in this new Clause. I know there were some formidable dissentients, but I think I may claim that this proposal had the assent of 65 per cent. of the Members sitting on the Liberal benches, which, I think, is an unprecedented measure of assent. The right hon. Gentleman the Member for Carnarvon Boroughs also pointed out
that if the expenditure of this money did not produce the proportionate amount of new employment claimed for it, no money would be spent at all, and there would be no loss to the Exchequer. Therefore, this proposal is as reasonable as it could possibly be made. On these benches, on the last occasion when this subject was considered, we followed the lead of the Liberal party in view of the careful study which it has given to financial matters of all kinds. We have learned something of their diligence and their high authority from the many Yellow Books and other coloured books which they have prepared, and which from time to time they have used to illuminate public discussions on these matters. [Interruption.] There is no reason why any hon. Member should object to that. On the contrary I think he ought to be delighted that any contributions to the solution of this problem by the Liberal party should gain such a wide measure of support.
We took the plan of the Liberal party and supported it. We relied on their authority, and on the earnestness and diligence with which they studied this subject. I want to know whether the Chancellor of the Exchequer is going in any way to defer to the speech made by the right hon. Gentleman the Member for Carnarvon Boroughs and his arguments, and whether he is going to defer to the strong expression of opinion in the House which was, in fact, so strong that it almost effected the translation of the Chancellor of the Exchequer to a position of greater freedom and less responsibility. I do not know whether the right hon. Gentleman is going to defer in any way to that expression of opinion. It may be that the right hon. Gentleman does not feel that he is in any danger this afternoon, and that he is on this occasion under no obligation to the Liberal party. But perhaps the Chancellor of the Exchequer will say
Ease would retract vows made in pain;
As violent and void.
The Chancellor of the Exchequer may not feel disposed to pay any attention to his words, but he told the party below the Gangway that he had the same object at heart as that which was contained in their Amendment, and he hoped to be able to find words, probably couched in
different language, to give effect to it. At any rate, in moving this Clause, I offer the Chancellor of the Exchequer, in the first place, an opportunity of letting us know Where he stands with regard to this proposal, and what value we are now to attach to the assurances which, I think with a somewhat wry face, but nevertheless quite unequivocally, he gave to the right hon. Gentleman the Member for Carnarvon Boroughs in the hope of averting his ire.
6.0 p.m.
That is the first reason why I felt it to be my duty to put down this Clause. The second was that I thought that it would be a very great pity if a matter which has excited to much interest, and which was the result of so much careful thought and study by the Liberal party, should, as it were, slip aside from our discussions unnoticed, and not be brought forward with all proper formality upon the Report stage. I watched for some days, and studied the Order Paper each morning with anxious care, to see which Members of the Liberal party would set this Clause down on the Paper, and what support it would receive from them. But when, yesterday, some of my hon. Friends who take an interest in this matter drew my attention to the fact that, although the days, and even the hours, were slipping by, towards the time when the Report stage must inevitably be taken, the Order Paper was blank in respect of this important proposal, upon which, as I have said, the Government were almost hurled from power, and upon which within two of a majority of this House have already expressed a favourable opinion, I felt it to be my duty to step into the breach and to place this Clause upon the Paper, in order to enable the party below the Gangway once again to show that, whatever may have been said or done here or outdoors, there are at any rate some important topics upon which the Gangway is narrower than the Floor.
I make no sort of reproach, I say candidly, to the Liberal party on this subject, I should never think of reproaching those whose votes I am anxious to obtain in the Division Lobby; and, therefore, I am in no way commenting upon their neglect to place this Clause on the Paper. Indeed, I know that they have
had quite a lot to think about lately, and have been very busy on one thing and another, and doubt this was an oversight. I have repaired the oversight. I have not only enabled them to renew their support of this proposal, but I have given an opportunity to the Chancellor of the Exchequer to make concessions which will, perhaps, reunite the House of Commons on a matter on which it was so acutely and narrowly divided.
As to the merits of the proposal, there really can be very little doubt that to spend the sum of money which this Clause would involve upon increasing and improving the plant of all our great productive works throughout the country would be an incomparably more fruitful and more prudent employment of our limited resources than any of those other schemes upon which millions are being poured out. Still more would it be an improvement upon that immense outflow of public money which has already ruined the Unemployment Insurance Fund, and for which further immense demands are to be made upon us tomorrow. For these reasons—firstly, the merits of the proposal; secondly, to afford an opportunity to the Chancellor of the Exchequer of making a concession; and, thirdly, to express my gratitude and regard for the Liberal party for the care which they have taken in illuminating our discussions on this subject, and the stout-hearted manner in which they have testified to their conviction in the Lobby—I desire, with great respect, to move this Clause.

Mr. P. SNOWDEN: I am afraid that the right hon. Gentleman has exposed too clearly the purpose that he had in view in moving this new Clause to achieve his purpose. It has been discussed in an atmosphere much less keen than that in which a similar Clause was debated a few days ago. It would have been interesting if the right hon. Gentleman had carried his account of the origin of this Clause, and the circumstances in which the critical Division took place last week, a little further, but I suppose that that is one of the secrets that will remain locked in the breast of the right hon. Gentleman. It will have been noted by the House that the right hon. Gentleman said hardly a word about the proposed new Clause, and, indeed, no word at all of explanation or exposition of its
merits. He appears to be quite satisfied with the origin of the Clause. He has the most perfect confidence in the party of which he once was a very brilliant member, and, although he has left it now for a good many years, he has evidently retained a good deal of his old Admiration for it.
The right hon. Gentleman said, without quoting words, that I had given encouragement and hope, in the concluding part of my speech last week, that I might be able to accept, in a somewhat changed form, the Clause which was then moved and which was rejected by a narrow majority. The right hon. Gentleman was wise not to quote my exact words. What I did say was—I am not, using the words that I used on that occasion, but the substance of what I said was—that I would be prepared to consider any practical proposal calculated to stimulate industry; but I certainly never said that I should be prepared, on the Report stage of the Finance Bill, to submit proposals such as this.
It is unnecessary for me to deal with what the right hon. Gentleman called the merits of the Clause. I dealt at considerable length a week ago with what the Clause actually proposes. I pointed out its comprehensive character—its unlimited character; the way in which, if it were adopted, it would spread its blessings broadcast without any discrimination whatever; and the fact that companies needing no financial assistance whatever to carry out schemes of improvement would be the largest recipients of the bounty that would be given. After further consideration of the whole matter, I should not be prepared to say that this is the best way in which a given amount of money can be spent. I think that those schemes which we have approved, amounting in the aggregate to a sum running into tens of millions, under the Development Act, are a far better way, because then you get the assurance that the money will be spent upon schemes which have been previously examined, thoroughly investigated, and approved. There would be no control whatever in the spending of the money by any previous consideration if we were to adopt this method.
I stated, when I spoke a week ago, what the cost of this unlimited proposal would be. My figures were brushed aside
by the right hon. Gentleman the Member for Carnarvon Boroughs (Mr. Lloyd George) with the remark that they were simply fantastic. As a matter of fact, my estimate is perfectly accurate, that is to say, as accurate as such an estimate possibly could be. The difference between what the right hon. Gentleman the Member for Carnarvon Boroughs had in his mind as the cost, and the cost of such a Clause as the one now proposed, lies in this: The right hon. Gentleman submitted to the Inland Revenue authorities a question as to what the cost of a certain proposal would be, but his proposal was of a very limited character, amounting practically to what was suggested by the hon. Member who moved the Clause a week ago, that is to say, not an allowance on the whole sum that was spent upon renewals, but on the amount of expenditure in excess of what might be regarded as replacement, That is the explanation of the difference in the estimate of £5,000,000 to £7,000,000 which the right hon. Gentleman the Member for Caruarvon Boroughs gave, and the actual cost. This Clause, which is identical with the Clause moved a week ago, would give relief to the whole of the sum that was spent upon replacements, improvements, and ail the rest of it. I do not think it is necessary that I should say more on the subject now.
The right hon. Gentleman suggested that I might do something in the way of accepting the principle, but we are not dealing, at this stage of the Finance Bill, with principles; we are dealing with actual proposals, and the only matters that the House has to consider now are this Clause, the terms of the Clause, what it will do, its effectiveness if it were carried, and its cost if it were carried. I cannot imagine that the House of Commons, in possession of the knowledge of what the Clause involves, could give that support to it which a large number of Members gave a week ago.
May I just add this one word? I cannot imagine that the party below the Gangway opposite could on this occasion support this Amendment, and for this reason. As I pointed out at the time, the hon. Member who moved the Clause a week ago abandoned the Clause altogether. He never attempted to defend it, but suggested something entirely new and different in every detail
from the terms of the Clause which was on the Paper. I cannot, of course, accept an Amendment Which would involve the sum of money that I have named, and which, I am quite certain, would be spent in a way far less effective than other means for assisting industry. A sound business to-day has no difficulty at all in getting the money that it needs for reconditioning. There are practically—if I may use the word with limitations—unlimited resources at the disposal of industries to-day which are in a position to show that they would pay for reconditioning, reorganisation and re-equipment; and it is far better, in my view, that whatever resources we should be able to offer to help industry should be spent in ways that would ensure bringing about the results that we desire. For that, among other reasons, I cannot accept the Clause.

Mr. OLIVER STANLEY: I do not want to delay the House by fighting over again a battle which has already been concluded, but my excuse for intervening in this debate is that, on the Money Resolution, I moved an Amendment which raised the important question, which is implicit in this proposed new Clause, that some form of encouragement should be given in one way or another to the reconditioning and re-equipment of our trade and industry. It is true that, owing to the fact that I was called upon to move my Amendment at a time when most Members of the House were absent, with a view, no doubt, to reconditioning and re-equipping, but not necessarily improving, their own plant and machinery, there were not many Members in the House who had the advantage of my explanation. I urge on the Chancellor of the Exchequer that he should give it some encouragement, not in this Clause and not necessarily in this way, but that he should give us some hope that at some future time arrangements may be made to encourage expenditure on the re-equipment of their machinery.
The right hon. Gentleman has said, I think rightly, in view of the actual terms of the Clause, that he is spending many more millions in much more useful ways. Those millions that are spent under the Development loan are concerned entirely with public utility companies, and they do not touch in any
way the necessary re-equipment of modern industry. Although undoubtedly the right hon. Gentleman's answer to-day has been much kinder than before, the sort of answer I gather which was expected if, unfortunately, that telephone conversation had not gone wrong, I cannot help wishing that he had been a little kinder still and given some indication that at a future date he would at least consider the principle that underlies the Clause.

Sir HERBERT SAMUEL: The right hon. Gentleman the Member for Epping (Mr. Churchill) has moved this Clause in an amiable spirit of geniality, with a smile on his face, but it seemed to be rather a wry smile, somewhat the smile of a tiger that has missed its spring, if one can imagine such a thing in connection with such an animal. He complimented us too much when he said the Clause was put forward in Committee as a carefully-framed, elaborately devised, fully considered proposal, perfected to its last point and intended as a definite legislative proposition. It was made quite clear by my hon. Friend who moved it that any proposal dealing with a matter so complex and so technical ought properly to be prepared in consultation with, if not by, the Government of the day, and that it was put forward really for the consideration of the Chancellor of the Exchequer in the hope that he would agree to devise a watertight, practical proposal at a later stage of the Bill. Frankly, we were exceedingly disappointed that he gave a reply which was not of that sympathetic character that we should have desired, for it is a question of great public importance whether or not our fiscal system should be so devised as to apply the full weight of taxation upon savings which are to be used for industrial development. It seems to me to be open to much criticism that our fiscal system as a whole does not seek to discriminate in that manner.
I quite agree with what the right hon. Gentleman said that, if you admit the principle at all, it carries you a long way, and that you may have to take into account, not only those investments for industrial development and equipment which are derived from the savings of the year, but also those that are derived from other sources, and you have
to consider whether you can discriminate and, if so, where you should draw the line. That the matter is one of importance, and should command the very earnest attention of the Government and the House, seems to me to be beyond dispute. I agree with the right hon. Gentleman that one important consideration in the question whether the relief that is given, if any, should be on all moneys used for this purpose or only on moneys that are used in excess of the normal in a time of emergency, such as this. That was the intention that my hon. Friend who moved the Amendment in Committee had in view, that it should be an inducement, by means of a lightening of taxation, to people to take in hand works now which might otherwise be postponed, and so offer some relief to the terrible problem of unemployment which now vexes the minds and oppresses the homes of so large a proportion of the nation, and our appeal was that the Chancellor should go into this matter in that spirit. If there was a discrepancy between his estimates and those of my right hon. Friend the Member for Carnarvon Boroughs (Mr. Lloyd George), he has explained how that came about: that my right hon. Friend was thinking all the time of relief that would be given to moneys invested in excess of the normal, and the Chancellor gave a much larger estimate assuming that relief would be given to all moneys—so I understood him.

Mr. P. SNOWDEN: I do not think that applies to the right hon. Gentleman the Member for Carnarvon Boroughs. He so expressed his question to the revenue authorities that that was the construction they put upon it, but I think he had in his mind the assumption that it covered the whole field.

Sir H. SAMUEL: We discussed this very fully, and our intention was to give relief to the surplus. I agree that the Amendment as originally proposed did not clearly express that. I forget whether my hon. Friend the Member for Luton (Dr. Burgin) brought out this point in moving the Clause, but, in any case, what the Chancellor might have done was to say that, if this meant to relieve from taxation all expenditure, normal and special, it would cost £30,000,000, but if it was to cover a more restricted field,
it might be a sum in the neighbourhood of £7,000,000. If he had given a reply in those terms, it would have been regarded as a more conciliatory answer than one that brushed aside the whole suggestion by taking the maximum of objection and admitting the minimum of advantage. However that may be, we are now in the Report stage and not in Committee, and it is customary in Committee to put forward proposals, which those who make them may admit are not in the right form, as a means of evoking the assistance of the Government if they can do so. Frequently the Government will reply that the Amendment as proposed is not workable but, if they feel so, they regard it as one that is just in principle and they will consider it at a later stage. That is the reason why we moved the Clause, and that is the answer that we expected. Greatly to our regret the right hon. Gentleman has not given it. This being a legislative proposal now on the Report stage, I should feel some doubt as to voting for it. As a matter of fact, I abstained on the previous occasion, and I should in any case have done so again to-day, but my hon. Friends who voted for it are, of course, free to do so again, and I have no doubt many of them will, but I see no reason why, because the right hon. Gentleman the Member for Epping assured us that he had been so glad to vote with us on the previous occasion, I and others should respond to his invitation when he desires us to vote with him.

Mr. ALBERY: It appears that, whatever the attitude of the Liberal party was on the last occasion, they have reached some sort of unanimity now. It has been advanced that the Chancellor ought to give the Clause more serious attention than he has given it on account of the very close vote when the Government escaped with a majority of two, but I do not think that is putting the case as strongly as it ought to have been. It is clear that, when we last divided on the Clause, there was a majority for it, because there were 12 or 13 members of the Liberal party who, we have every reason to believe, were in favour of it—and that is reinforced by the speech just delivered—who bad such great regard for the valuable services of the Chancellor of the Exchequer that, finding themselves in the difficult position of either having
to let the Clause go or to let him go, decided that of two evils the Chancellor was not the greater. Therefore, I think the right hon. Gentleman should bear in mind that there is a majority in favour of the Clause which has now been moved again.

Mr. ATKINSON: I think we ought to press the Clause, because it is based on sound principles. We do not seem to mind how many millions we spend on works which are mere palliatives. We do not care how many millions we spend on maintaining people who are out of work, but the moment there is a proposal which will make industry better able to employ people and find work, the Government kick against it and nothing is done. I protest altogether against the idea that so-called profits are real profits until buildings, plant and machinery have been kept abreast of the times. They are wasting assets. Let me give one or two illustrations of what I mean. The report on the cotton industry pointed out that the mule spinning machines ought to be changed for ring spinning machines, and that the ordinary loom ought to give way to the automatic loom. In other words their plant has ceased to be moneymaking plant under present conditions. How can it be said that, if they were making so-called profits, those were really to be treated and taxed as profits until the plant had been kept abreast of the times and made a money-making plant? Take another illustration. People will not take rooms in hotels unless there are bathrooms and running water. Hotels have constantly to be spending money out of their pockets in this way. They are treated as if they were profits but, until the money has been spent on maintaining the property and keeping it abreast of the times, you do not begin really to talk of profits that ought to be taxed or divided among the shareholders. If your plant is not renewed, in a few years it is worn out and your capital has disappeared. You are living on a wasting security, and that which you have been treating as profit was not really profit, but represented a part of your capital.
I am convinced that it is a sound principle for every concern to treat a certain proportion of their so-called profits as really representing wasting capital, and
that they ought to be permitted to treat that fair proportion as if it were not taxable income but income in respect of which they ought to be relieved of taxation. Until that principle is recognised, I am certain we shall be going on wrong lines. This Amendment provides for the case in which money is actually spent. Every penny of the money would be spent on finding work for someone and upon making the concern in question more efficient for employing people. I can scarcely imagine a better way in which to spend money for the purpose of providing employment than this proposal. Quite apart from that fact, it is right in principle that money spent in that way should not be treated as taxable profits, but should be treated as money expended on making good wasting capital.

Mr. BOOTHBY: From what the right hon. Gentleman the Chancellor of the Exchequer said when he interrupted the right hon. Gentleman the Member for Darwen (Sir H. Samuel), it appears that he must have been under a misapprehension as to the purport of this Clause which has been moved by my right hon. Friend the Member for Epping (Mr. Churchill). It is clear that he imagined that the intention of the right hon. Gentleman the Member for Carnarvon Boroughs (Mr. Lloyd George) was, that all new plant should be exempted from Income Tax during the next two or three years, whereas the right hon. Gentleman the Member for Darwen has made it perfectly clear this afternoon that the intention of the Liberal party when they moved the Amendment was that the relief should apply only to surplus new plant over and above an average which might be taken for the last two or three years. In those circumstances the Chancellor of the Exchequer would require very radically to revise the astonishing estimate which he gave on the Committee stage, when he said that this proposal might cost something like £30,000,000 a year. In point of fact, it would not cost anything like that sum of money. I am sure that the House will note with interest the attitude of the Liberal party to-day, as it did their action the other day, on the very great constructive proposal which they put forward, after, as the right hon. Gentleman the Member for Darwen pointed out, a great deal of discussion and after having been given infinite
trouble in drafting the Clause. They could not have received a more devastating and destructive reply than that received from the Chancellor of the Exchequer on the Committee stage. He held out no hope whatever that he would even consider any more suggestions along those lines. And here they are this afternoon not even going to vote for the. Clause which they themselves put down. [An HON. MEMBER: "Wait and see!"] I must say that I am delighted to hear that remark. I was under the mistaken impression for the moment that the Liberal party were being led from their Front Bench, but I see that it is a mistake to-day, as it has been a mistake on other occasions.
There is another point which arises in connection with this Clause, which, I think, deserves consideration. It would, no doubt, help the industries of this country to speed up the vital processes of reconstruction or rationalisation. A very vivid proof of the advantages of rationalisation has been afforded by the export trade figures of Germany which were published the day before yesterday. The industries of Germany are rationalised and reconstructed to a far greater extent than the industries in this country, and the critics of rationalisation in this country would do well to ponder over the fact that for the first time since the War, and for the first time in her industrial history, Germany's export trade is larger than ours. I believe it is the re-equipment and reconstruction of Germany during the last three or four years which are principally responsible for this state of things.
The Chancellor of the Exchequer on the Committee stage and again this afternoon used an argument which I do not think will hold water for a moment. It was the same senseless argument against the de-rating proposals put forward by the late Government, namely, that sonic of the benefits would go to prosperous industries in this country. It is upon the greater prosperity of prosperous industries in this country that our whole hope for the future will depend. The Chancellor of the Exchequer has not produced a single constructive proposal in his Budget to assist British industry in any form whatever. Every single Clause which he has advanced is going to act to the detriment of British industry and
it is going to make it more difficult for us to reconstruct, rationalise and compete successfully in the markets of the world. At the same time, anybody who has the future of British industry at heart would, at any rate, do well to make a gesture this afternoon by voting for at least one constructive proposal put forward in the course of this Budget.

Mr. W. J. BROWN: I rise to state the reasons why I do not think the Government should accept the Amendment. In the first place, there is, probably, no field of Income Tax in which tax evasion is carried to a further point than it is in regard to the returns furnished by limited liability companies in this country. This Amendment would carry on to a very much greater extent the tax evasion which exists in regard to limited liability companies, and on that ground alone it ought to be resisted by this House. I also object to it on the ground that it suggests a subsidy from public funds to private industry in this country. I am not an opponent of all forms of subsidy, and I can conceive occasions where even a Labour Government would be justified for public reasons in making a subsidy to a particular industry. But it seems to me to be a cardinal article of faith that whenever the Labour Government make a subsidy to any form of private industry, that subsidy should be accompanied by conditions which operate in a Socialist sense. I can see no justification for a form of subsidy from a Labour Government to private industry in this country unaccompanied by any kind of conditions whatever operating in a Socialist sense. On those two grounds alone, the Government ought to resist this Amendment. Some of us have watched with a good deal of concern the progress through this House at an earlier stage of a home development Bill and the Colonial Development Bill. Both of these Bills in effect provided subsidies from public funds for private industry in this country and in the mandated countries, and I am very glad that the Government have learnt sufficient from their experiences of those two Bills as to resist this proposal for a further unconditional subsidy to private enterprise in this country at the public expense. On those grounds, I hope that the Government
will resist the Amendment, and, if necessary, go into the Division Lobby against it.

Major ELLIOT: It must, indeed, be a happy day for the Government to find themselves reinforced not merely from below the Gangway, on this side, but from the hon. Member from the mountains—the back bench opposite. It is, indeed, interesting to see supporters of the Government, owing to the narrowness of the Division on the previous occasion, hastening to their aid, especially those who do not usually go to such trouble to support them. The Government have seen their majority go down by reason of the two expulsions which have been carried out to-day, and thus the majority of two on the last occasion has disappeared. The Government may well consider the desirability of being saved from their friends. The support which has been brought to them by the hon. Member is typical of the arguments which must weaken the case he has at heart. What is being brought before the House? It is a proposal in the first place adumbrated by hon. and right hon. Gentlemen below the Gangway by whom, we have just been told by the right hon. Gentleman the Member for Darwen (Sir H. Samuel), it was long and anxiously considered, closely debated and thoroughly examined and put down upon the Order Paper with the full weight of responsibility. It was not put down merely to obtain an indication of the attitude of the Government of the day. The chief Liberal Whip and the second Whip told in the Division, and we were told that it was with the object of obtaining an indication of the attitude of the Government. We were told by the Chancellor of the Exchequer at the week-end that if they had been defeated on that occasion, he would have turned the meeting which he was addressing into an election meeting. All this was to obtain an indication of the views of the Government of the day. What an absurd proposal to bring before the House of Commons at this time of day.
Now we are told that, of course, you could not defeat the Government on the Report stage of the Bill. You can carry a proposal against the Government, you can put on the Chief Whip to tell, and
you can bring down the Government of the day by an Amendment carried on the Finance Bill in Committee, but now on the Report stage of the Bill things are not the same. There is the Naval Conference which has just concluded, and the Imperial Conference which is about due to start, and the Indian Conference which is now proposed, and all these things being considered, it is quite impossible that the proposal which was rejected by the Government by two votes should seriously be pressed by hon. and right hon. Gentleman below the Gangway even after such close consideration was given to the matter before they passed into the Lobby to record their votes on the last occasion. Why was it necessary for the right hon. Gentleman to bring forward the proposal Surely, as the right hon. Gentleman the Member for Carnarvon Boroughs (Mr. Lloyd George) said, you have to do something. It is useless for the Chancellor of the Exchequer merely to adopt the "No, no" attitude, and then to stalk contemptuously out of the House, leaving the debate to be carried on by the Financial Secretary to the Treasury who, no doubt, at a later stage will rise to report Progress as he did on the last occasion when he was deserted by his right hon. Friend. I have no doubt that it will be agreed on all sides of the House that unless something constructive is done, there is a danger of panic methods being adopted.
The Chancellor of the Exchequer said that this is a very expensive proposal, and that it might cost £30,000,000. The smaller proposal might cost even £7,000,000. What about the proposals he is about to commend to the House to-morrow, and what is likely to be the financial condition of the country just now with the cost of transitional benefit being thrown wholly upon the Exchequer? The sum required in this respect was £8,500,000 on the introduction of the Employment Bill, and it had gone up to £10,500,000 when the Bill passed through the House. We were told in this House not more than a week or so ago by the right hon. Lady the Minister of Labour that the burden falling wholly on the Exchequer had risen to £18,000,000. If the figures of unemployment increase, the sum to be carried wholly and entirely by the Exchequer will reach £20,000,000. Far more than the sum which would be
required to make this concession will be swallowed up in the unremunerative payment of the dole to which no contribution has been made, which has to be carried wholly and entirely by the Exchequer, and for which provision has to be made in the Finance Bill either this year or the year to follow. A sum of £20,000,000 in respect of an unemployment total of 1,900,000, but I am afraid that the unemployment figures are not going to stop there.
That is the figure which will fall on the taxes of the year, but what is the figure which will fall on the borrowings of the year? A sum of £15,000,000 will, we are told, have to be borrowed over and above that which the Government expected to have to borrow. A sum of £20,000,000 will have to be borrowed to carry 1,900,000 unemployed. If the unemployment figure reaches 2,000,000 or 2,500,000, the sum will rise to over £60,000,000 sterling to be financed by borrowing and taxes. And yet at this moment the Chancellor of the Exchequer is boggling over a sum of £7,000,000 which would be required to meet the concession in regard to plant! The Budget is shattered, ruined and completely destroyed by the sum it will be necessary for him to find this year, or for his predecessor to find next year, for unemployment insurance, the borrowings of the Fund and the transition period. In those circumstances, with the unemployment figures rising every day—an increase of 40,000 upon last week—the Chancellor of the Exchequer turns an absolutely deaf ear to a proposal brought forward by both sections of the Opposition. As he is ruling out tariffs altogether, he should consider some other method of dealing with the crisis in which the country finds, itself to-day.
The right hon. Member for Carnarvon Boroughs was right, a thousand times right, to bring forward this proposal and to back it in the Lobby with all the votes that he could command. The only people to blame are those people who, after their party had met and decided its course of action, and after the chief Whips of the party had been put on, in support of an unshakable and unanswerable case, ran away in a cowardly fashion because they were afraid to face a General Election. I will not say that the Chancellor of the Exchequer has run away. It is not a very great loss when
he leaves the House, because his mind is as much made up at the beginning of an argument as at the end of it. We do not gain anything in having him here, because it is hopeless to convince him or to give figures which will be any sort of information to him. The Chancellor of the Exchequer is nearly always wrong when he quotes figures, and he turns a deaf ear to the figures of other people, however accurate they may be. He is always inaccurate in the figures which he quotes. He has had to apologise publicly in this House for inaccuracy in the quotation of figures during the conduct of this Finance Bill, a thing that has never happened to any Chancellor of the Exchequer in my recollection.
The estimate of £8,500,000 has gone up to £10,000,000, the £10,000,000 that was estimated has gone up to £18,000,000, the £18,000,000 has gone up to £20,000,000. The figures are still rising, and they have to be borne up by the taxes. The Chancellor of the Exchequer has given no indication how he proposes that these huge sums are to be met. Here was a Proposal that would have met the position. True, it was accompanied by no condition. The time is too, short for that, the crisis is too urgent for that, the mounting figures of unemployment are too awe-inspiring for that. The situation calls for action, but the Chancellor of the Exchequer votes for inaction. When the mountain behind him calls for inaction, then the Chancellor of the Exchequer will be rooted to his place, and will absolutely fail to make any forward move of any description. The hon. Member for Smethwick (Sir O. Mosley) yesterday made a most eloquent plea for action of some kind, but it was no use. The hon. Member for West Wolverhampton (Mr. W. J. Brown) has spoken. The mountain has thrown over the mountain. It is a very serious thing for the whole progressive movement within the Labour party, all too small, when that progressive movement turns upon itself and denies its own leader. The proposal which has been brought forward is one on which we intend to vote, and one which hon. Members below the Gangway on this side supported on the previous occasion. If they support us whole-heartedly on this, occasion, we may bring the Chancellor of the Exchequer to reason, and to bring him to reason on this subject would be
a task well worthy of the utmost efforts of the House of Commons.

Sir H. YOUNG: The Chancellor of the Exchequer has supported his rejection of this Clause by an argument so unsound that it ought not to go unchallenged. He told us that it would make no difference to the funds available for and the amount of work done in the way of reconditioning, re-equipment, modernisation and improvement of plant and machinery, if this Clause were to be passed. He said that there were unlimited funds already available for this purpose. I believe that to be totally untrue. In the first place, it is not a very appealing argument to a business man when you take away his own money, that ought to be available for the modernisation of his business, through the tax collector, to tell him, "You can borrow more money from someone else." It is conspicuously untrue in the practical world in which we live that unlimited funds are available for this purpose, and I think the contention shows what a danger a Chancellor of the Exchequer can be who pins his faith too firmly to the academic aspect of finance and is too little interested in the practical aspect.
Take the small business. Take the hotel business, which has been referred to. Does the Chancellor of the Exchequer really suppose that it makes no difference to the small business whether its own saved money is left available for re-investment in its business or whether it is taken away by the tax collector, and it is turned on to the money market to borrow as best it can? It may make all the difference in the world to that business. That argument of the right hon. Gentleman can only be advanced by a man who allows himself to be misled by concentrating himself too much on that species of high finance which is very often only the sort that comes through to the Chancellor of the Exchequer. There are countless small businesses in the country which if you deprive them of their own resources, which are available for investment in their business, are quite unable, owing to the general credit, to obtain the resources elsewhere, except at prohibitive rates. It is the opinion of practical business men that the best thing you can do for the business of the country is to leave the money which has been earned in the business to be
re-invested by those business people in the business which they understand.
It is untrue from the practical point of view that there are unlimited resources and it is untrue from the point of view of general academic economics. It is not the case that in any year there is an unlimited fund of the savings of the country available for re-investment in these essential purposes. There is only a limited fund available, and it is the case that if you take the country as a whole, and if you integrate the whole business world for all the purposes for which money is required, in so far as you reduce the funds available in the first place in the businesses for re-investment, by so much do you reduce the actual amount of work done in the reconditioning of the businesses. You can only obtain support for the point of view put forward by the Chancellor of the Exchequer if you concentrate your attention, as those in the administration of general finance are always apt to do, solely upon the biggest businesses, which have the highest credit.
The other argument with which the Chancellor of the Exchequer supports his case is that much of the money that is taken away by the tax collector is put back into business in the form of assistance given by the Treasury. There, we come to the most fundamental basis on which we join issue with the party opposite, and we need only to restate it in order to show how essential it is for us on this side of the House to support this Amendment, and I should have thought that the same argument would appeal to hon. Members below the Gangway. It is a matter of grave contention whether the businesses of the country are likely to be more vitally and more efficiently conducted if the control, the direction and the future development of the businesses is left in the hands of an official of the State, or in the hands of the people who have earned the money in the business and who are themselves practical business men. I have long thought that this particular feature in our revenue system is the biggest enemy almost that we have in our competition with foreign countries. We shall never do ourselves justice in the bitter competition with which we are confronted until we have the elementary common sense to make a distinction in our revenue system between the essential purposes to which money is devoted and the
less essential purposes. On these grounds, we shall register our votes in the Division Lobby.

Mr. GRAY: There are one or two points in connection with the proposal that I should like to put before the Treasury and the House. It is almost inevitable, somehow, in our discussion of these matters that we always seem to speak in the terms of large corporations. With the solitary exception of the reference to hotels, one has felt that what the House is considering mostly are the big corporations, which has vast sums of money at their command. Probably the greater bulk of the trade of this country and of the production of businesses in this country is done by the small firms, firms which do not spend money in the terms of thousands of pounds—garage proprietors, small repair shops, and all kinds of businesses which would not spend thousands of pounds but might put in a new lathe, a new drilling machine, or might extend their plant a bit to bring it more up to date, whether their business happens to be that of production or distribution.
I would like the Treasury to face up to what would be the effect of the Clause. It is a mistake to regard this Clause as a subsidy to industry. It is really nothing of the sort. The conditions to which the Clause apply are those of plant and machinery, which are those portions of capital expenditure which come under the claim for depreciation. As a matter of fact the Treasury does allow practically the whole of the money that we are asking them to allow, only they do not allow it at the time of expenditure. Anyone who expended money on plant or machinery would receive, according to the rate of depreciation, something probably between 7½ or 12 per cent. From the first year they would receive for depreciation that 7½ or 10 per cent., and they would go on receiving that year after year until the whole was wiped out. Therefore, what the Treasury would be doing by this Clause would not be to make a grant of a complete subsidy to industry; they would be asking industry to accelerate their expenditure upon plant and machinery, and at the same time the Treasury would be accelerating the depreciation that they would ultimately allow.
I would ask the Treasury to consider this matter in the terms of percentage.
Take a case where £100 is expended by a business on new plant. Under this Clause they would be allowed to write off that £100 in the calculation of profit. That would cost the Treasury this year £22 10s., which is 4s. 6d. multiplied by 100. If you take the depreciation which has been allowed, say, at 10 per cent., the Treasury would have to allow them in any case £2 5s., which would mean £10 at 4s. 6d. in the pound, so that on an expenditure of £100 they would have to allow on this year's Budget £20 5s. When £100 is spent through a local authority or a public utility society, we do not advance from the Treasury £20, but at least £50, perhaps £75, perhaps £85. Therefore, the amount provided by the Treasury would be infinitely less under our suggestion than the amount that is provided when various public works are carried out.
7.0 p.m.
Let me carry the proposition a little further. It is safe to say that an expenditure of £100 would employ a man for at least 13 weeks, probably more. In the case of a man who is receiving unemployment insurance pay for 13 weeks, and we assume that he has a wife and three children, he would be drawing over 30s. a week for doing nothing. A payment of 30s. a week for 13 weeks represents £19 10s. which would be saved to the Treasury on unemployment insurance against the £20 5s. allowed to the private trader for the development of his plant. Following it a little further, and assuming that you are only paying on the addition to the normal expenditure, you come to the point where nearly everybody on these benches is in a difficulty on this particular discussion, because, fortunately or unfortunately, the Clause, as put upon the Order Paper, does do more than we really intended. As drafted, the Clause will allow not only 4s. 6d. on the pound to be allowed, but, in the case of a private individual carrying on a very big business and spending £10,000, £20,000 or £30,000, it will allow him to get not only his 4s. 6d. but his Surtax as well, and bring the amount given to him up to 10s. in the pound or more of his expenditure. So far as I and many on these benches are concerned, that is not what we desire or intend. Carrying on the little sum I was putting, that expenditure of £100, if you increase your expenditure by twice
the normal, would thus give employment to a very large number of people, and, at the same time, the Treasury, having made that allowance this year, would receive year by year an increased amount of revenue from Income Tax owing to the fact that they would not have to allow the successive depreciation year after year, having allowed it in the single payment.
What I would put to the House and Treasury is this. Under the conditions in which we are placed, recognising that we have got to do something to stem this great tide of unemployment, you are not to-day by virtue of your great schemes of public expenditure—not even if you carry out that policy which we put distinctly before the country and embark on a vast expenditure on roads, bridges or any other public works—going to help back into industry the tremendous number of unemployed the burden of whom we are carrying to-day. If you want to do that and if it is the desire of the House to do something effective towards that, you have got to find some means of giving definite encouragement to industry. I do not mean the great corporations; I rule them out altogether, because I do not think they need it very much. The large corporation with plenty of money has already got its plant efficient, and no one is going to spend £5 in order to save £1 under this Clause. No business man is going to spend a pound which he does not need to spend and which will not bring him a return, in order to get 4s. 6d. off the Income Tax. The big corporations will not spend money under this Clause, but its great advantage is that it will give an inducement to the hundreds of thousands of small producers, who do not think in thousands, and will make them feel, if they want a new machine, that they will not have to put down a pound or 18s. but only 15s. 6d. in the £. The Chancellor and the Treasury have not given quite the consideration they might have given to the Clause. At the same time the Clause, as it stands, without any alteration or limitation, is a very difficult case because it will give relief to Surtax as well as Income Tax. I am one of those who are not disturbed in the least by the witty, clever, pungent remarks that may fall from Members on those benches. It
is their business if they can to give us and hon. Members opposite as much trouble as they can. We can, in turn, make witty remarks on the divisions of their party and on the party opposite. As far as I am concerned, the whole of those things leave me entirely unmoved. We should do what we can in this House by any measures that are practicable and possible to give some encouragement to the great mass of producers and business men in this country, who are facing a very difficult situation, to pay their way and meet their obligations. If it is possible for us in any way to assist them, it is the duty of this House to do so.

Mr. MacLAREN: I wish to intervene because of the speech of the hon. and gallant Member for Kelvingrove (Major Elliott). I entirely agree with almost every word in his speech, except, of course, his reflections on the political views of this side of the House. There is one thing I cannot understand, and that is his indignation at the rising amount of money, namely, £20,000,000, that will be required for the stabilisation of the Unemployment Fund. Nor can I understand the enthusiasm of my Liberal colleagues on the other side of the House. Let me say at the outset that, perhaps at the point of being suspect, I have in and out of season in this House always argued for the untaxing of industry. I believe, and hold as a cardinal principle, that all taxation levied upon industry is a hindrance to the development of industry in this country. I also believe that one of the greatest contributions towards the stopping of your international trade to-day is the inflation of your export prices, which is a reflection of your heavy taxation on industry in this country. Something must be done to remove the taxation levied upon the industry of this country if you are to allow the wheels of industry to free themselves and to get into full operation.
I ask my Liberal friends opposite: Do they really believe—and I address this particularly to the right hon. Member for Darwen (Sir H. Samuel)—that the remission of £7,000,000 a year for three years is going to rehabilitate industry and obviate all that is likely to come from this menace of unemployment? Surely not. I think I know sufficient of the Liberal party and its policy of recent years to know that no Liberal would ever suggest
that for a moment. If a paltry £21,000,000, which is the three years spread-over of £7,000,000, is going to rehabilitate the industry of this country, then I can understand the enthusiasm and pressure for this Clause, but no serious Member of this House could argue and prove such a proposition. It cannot be done. I rather agree with the hon. and gallant Member for Kelvingrove about this increase of unemployed which is inevitable. We shall see 2,500,000 this winter. There will be an increase of the money necessary to stabilise the Unemployment Insurance Fund, which the hon. Member says will run up to £20,000,000. That is so. He rightly says that that will wipe away all the advantages that the Government are going to get by resisting this Amendment. I entirely agree with that also. I am not so sure that, if I were Chancellor, I would not give £7,000,000 if I knew where I would get the £7,000,000 which I would lose by agreeing to the Clause. Now as to the £20,000,000 for unemployment, even annual amounts of £20,000,000 for unemployment—

Mr. SPEAKER: We are getting a long way from the Clause.

Mr. MacLAREN: I was only referring to it in passing. I was trying to draw a parallel.

Mr. SPEAKER: It is a different matter entirely. It has nothing to do with the Clause.

Mr. MacLAREN: It was tolerated in the one case, and I thought I was entitled to refer to it in passing. The £20,000,000 was also used in another direction. The House has continued to squander millions in this way. There was the expenditure on de-rating. We were told that that would help industry and give it a step forward. That scheme involved much more than £7,000,000 a year. I do not believe that the remission given in respect of rating, involving a heavy expenditure annually, is going to help this country very much for a simple reason that might have been self-evident even to those pressing for de-rating proposals at the time. The point, which should be self-evident to those who enjoy these proposals now, is that any remission given in rating or given with regard to money put back into industry will have to be met by increased taxation
in some other direction. I know that when I rise, you, Mr. Speaker, always become apprehensive lest I should bring in a favouriate theme. One advantage I have is that even when I do not mention it the House always thinks of it. I have the advantage over you, Mr. Speaker, that I can still be extremely eloquent without mentioning it, and still be in order.
The difficulty that the Chancellor of the Exchequer finds himself in now is the old difficulty of all Chancellors of the Exchequer. I dare say the present Chancellor of the Exchequer, still having reminiscences of his own Radicalism at the back of his mind, would be willing to give all the remssions asked for for the industry of this country, to remove all taxation on industrial reserves and on money put into industry, but he is in the difficulty of all Chancellors that this will open the door to all sorts of evasions of Income Tax. That would not worry me because, as Income Tax is an immoral impulse, I always admire the man who evades Income Tax. The important fact is that Chancellors one after the other, whether Labour, Tory or any other kind, are always afraid to make concessions because they say that the moment you make these concessions you open the door to evasion and then, where are you? I should have admired my Liberal friends opposite if, when they were asking for this remission and supporting it with such eloquent arguments they would run the risk I have run by suggesting an alternative method of taxation that would raise the money and give the country all it desires. Taking the money to make a remission always means an extension of taxation in some other direction. For my own part, I agree with my hon. Friends opposite that unemployment will go up, even if you given £7,000,000 or £30,000,000 in remission, and will continue to rise until you do something much more radical than giving £7,000,000 per annum or a remission on capital reserves and on the money you can prove you have put into industry.

Captain CROOKSHANK: We have had an extremely interesting discussion and we are always pleased to hear the hon. Member opposite even though he does not mention the subject closest to his heart. The speech of the hon. Member on the Liberal benches, well documented
and carefully weighed, left us in doubt at the end as to whether or not he was going to support the Clause. The right hon. Member for Darwen (Sir H. Samuel) is having a field day because he with great difficulty disguised from us his disappointment about the speech the Chancellor of the Exchequer did not make last week. He was so disappointed that he did not take part in the Division last week, and to-day he reconstructs what the Chancellor of the Exchequer ought to have said. It indicates the state of mind of the right hon. Member for Darwen. Last week he was in the same position as his distinguished prototype, waiting to hear what the Chancellor of the Exchequer would say, and saying, "Speak Lord, for thy servant heareth." Unfortunately, the Lord of the Treasury had nothing to say. To-day the right hon. Gentleman the Member for Darwen is not going to vote. He is making a habit of it and I hope his constituents will be satisfied that he is earning his salary, a matter which is often thrown up against us at election meetings, by not attempting voting at all.
This is a good Clause as far as it goes, and I should have thought that the Government would have been only too anxious to clutch at any straw which might have any beneficial effect on the terrible problem of unemployment. The Chancellor of the Exchequer says that there is plenty of money lying about for people to borrow in order to renew their plant and machinery, but that point was completely disposed of by the right hon. Member for Sevenoaks (Sir H. Young). I do not know what the Chancellor of the Exchequer thought he was trying to convey to the House by that statement. Neither is this a form of subsidy of industry. You have to prove that money has been spent on such things as the installation and erection of plant and machinery for reconditioning. Nothing less like a subsidy could be imagined. A subsidy is putting money into people's pockets to spend as they wish for their own pleasure. In this case it is only to be paid after definite proof that certain things have been done. With the figure of unemployed round about 2,000,000, the Chancellor of the Exchequer says that it is much better to deal with that problem by funds arising out of the Development Acts. They are very useful but very limited, and no amount of
money spent on the lines of the Development Acts is going to recondition industry. It may help transport, and roads, and railways and harbours, but these Acts have nothing in the world to do with the actual reconditioning of industry and making it possible to provide goods at a cheaper rate.
Before we break up we are to be asked to provide a further sum of money from the Treasury for paying uncovenanted benefit, or doles, to a great number of people who contribute nothing. Even this Government must see that, £7,000,000 is going to do something to bring industry up to date, and if it is going to put a few thousands of men working at their own trade and industry, surely it will be some contribution on the part of the Government towards a solution of the problem. Members of the Government sit with a look of blank negation on their faces when unemployment is mentioned, and I have no doubt that the Minister of Labour will take up the same attitude when we have another debate on unemployment. This is a proposal, made in all sincerity by the Liberal party and supported by the whole Conservative party, which can be put into operation without any lavish expenditure of public money, indeed, without any expenditure of public money at all.
I suppose the Financial Secretary reads the "Times," and, if so, he will find day after day letters from correspondents in all parts of the country with regard to the Unemployment Insurance Fund and stressing the opinion that something should be done to get more people back to work. Here is an obvious opportunity. Surely, it is much better to spend, or to refrain from taking back into the Treasury, a sum of £7,000,000 than to have to go on paying £10,000,000, £20,000,000, and more, for the relief or assistance of people out of work. These are considerations which should weight with a so-called Labour Government more than with anyone else, and yet they sit there adamant. I hope the country will take note of the completely unconstructive and hopeless attitude of the Chancellor of the Exchequer and his Financial Secretary.

Mr. CULVERWELL: I intervene in this debate because, like many of my hon. Friends, I feel that the Chancellor of the Exchequer is paying no attention
whatever to any constructive suggestions to help industry by means of this Budget, and I should like to express my gratitude to the Liberal party for having introduced this new Clause and for having addressed arguments so strong in favour of it. It is a Clause which has received the support of a majority of Members of the House and I should have thought that the Chancellor of the Exchequer would have paid more attention to it. He should have treated it with greater seriousness. It is the more desirable that he should pay some attention to this new Clause because during the whole course of the Budget he has done nothing whatsoever to assist industry in any way. Instead of lightening the burdens upon industry the Chancellor of the Exchequer has added to them. I admit that force of circumstances, pressure from his own back benches, has compelled him to make some concessions to the programme upon which his party won the Election, and we cannot altogether blame him if he gave way to some extent to the demands which were made upon him.
Having gone to these lengths to satisfy the back benchers of his own party one would have thought that having put these extra burdens upon industry in one direction he would have done something to have lightened them in another. The hon. Member for Burslem (Mr. MacLaren) said that the taxation of industry is very harmful and not in the best interests of the country as a whole, but that he could not possibly support this new Clause because there is no means of finding the money to pay for it. That is not so at all. It has been pointed out, and suggested to the Chancellor of the Exchequer that the £7,000,000 which this will cost can quite easily be paid for by postponing the redemption of Debt. There is no necessity in these parlous times, when industry is struggling and unemployment is mounting, to adhere rigidly to the policy of Debt Redemption, and the Chancellor of the Exchequer might well pay for this by postponing the amortisation of Debt until the country is better able to afford what to my mind is something of a luxury.
The Government have prided themselves on the fact that such is the emergency, so terrible is the condition of industry and unemployment, that they mast adopt not only a long-term policy to
assist industry, but a short-term policy as well, and for that purpose they are increasing their expenditure upon works of national development, which I prefer to call relief works, and they do not hesitate to spend this money and add to the debt by so doing. If a suggestion is put forward which will provide a considerable number of workers with permanent, not temporary, employment it is idle for the Government to suggest that they cannot find the money to pay for it. This is an emergency, but hon. Members opposite do not seem to appreciate it. They do not seem to take any notice of the rising volume of unemployment. They sit there producing no constructive proposals at all except for the distribution of public funds in doles and increased benefits. The Chancellor of the Exchequer refuses to listen to our requests to assist industry by keeping out our competitors by refusing to adopt tariffs, which would prevent some of the competition from which our industries are suffering.
Having ruled that out, there is only one other way in which the Government can assist industry, and that is by relieving its burdens and lowering its costs of production to the same conditions which prevail in countries which are our competitors. The right hon. Gentleman refuses to take either of these courses. He will neither bring the goods of our competitors up to the level of prices in this country nor will he allow industries in this country to bring their prices to the level of our competitors. He must do one or the other. I hope he will treat this new Clause more seriously and not attempt to ride off by misleading the House as to the total cost of this proposal. All we ask the Chancellor of the Exchequer to do is to make an attempt to lighten the burdens upon industry, not to resist every demand in this direction and at the same time, in this Budget, to increase these burdens by the distribution of money upon unremunerative purposes or purposes which are purely temporary in character. He is not assisting industry in any way or reducing unemployment, on which this Government was elected at the last election.

Sir B. PETO: The Chancellor of the Exchequer said that my right hon. Friend the Member for Epping (Mr.
Churchill) had not introduced into his speech any serious arguments in support of this new Clause, and almost immediately the Chancellor of the Exchequer left the House and has not listened to the many speeches from all quarters of the House producing argument after argument largely in favour of the new Clause as it stands. The speech of the hon. and gallant Member for Kelvingrove (Major Elliot) was in refreshing contrast to the speech of the right hon. Member for Darwen (Sir H. Samuel), who condemned this new Clause with the faintest possible praise and claimed that all it did was to free from Income Tax only the surplus of money applied to the replacement of industrial machinery that is the amount over and above what is normally used for that purpose.
I shall add some arguments in favour of the Clause as it stands. Personally I regret that in present circumstances the Clause does not go further. Five years ago Sir Leslie Scott, then a Member of this House, moved a similar Clause to this on the Finance Bill, and showed clearly that every one of our principal Continental competitors and the United States gave to their industries advantages of the kind that are asked for in this Clause. Even the Chancellor of the Exchequer does not carry his fiscal views so far as to wish to handicap the industries of the country by additional taxation, charged, not upon profits, but upon money which is necessary for the maintenance and improvement of industry. I suggest that the right hon. Gentleman should look very carefully into this question. In condemning the Clause, the right hon. Gentleman indicated that he preferred the spending of money directly under the various schemes for the relief of unemployment. There are two ways in which that differs profoundly from the method of spending Treasury money—if the right hon. Gentleman calls it spending—proposed in this Clause.
This proposal is confined to money actually expended for the purchase, installation, erection and improvement of plant or machinery. That does two things. First of all it provides further jobs for the people who work the improved machinery. Before reaching that point it provides work for men in their own industries in making these machines and this plant. Therefore, the whole of
this money, big or little, is spent directly in employing people in their own industries. But that is not all. What is proposed in the Clause is an exemption from Income Tax at 4s. 6d. in the £. That means that the industrialist would be able to spend the whole of his fund on new machinery and plant, and not only 15s. 6d. in the £ of it. But what are the contributions of the Chancellor of the Exchequer to these relief works in various parts of the country? They are up to 50, 60, 70 and even 100 per cent. of the expenditure. That money has to be found by the Treasury. In this Clause we are asking only for 4s. 6d. in the £, or less than 25 per cent. Although it may be true that big industries have been able to spend money in the past few years in rehabilitating their factories and the like, yet it has been an extraordinary drain upon their resources, and there are many other industrialists who have not been able to find the money for the purpose. I ask the House to consider what Sir Eric Geddes said at a meeting of the Dunlop Tyre Company, as reported in the "Times" of 10th May:
Sir Eric was very critical of the methods of the Inland Revenue in assessing profits for Income Tax. The company was taxed on hypothetical profits. In the years 1924 to 1929 the Inland Revenue had levied taxes upon £3,700,000 over and above the dividends paid in respect of those years. The whole of the £3,700,000 had in fact been put back into the business for this development. If there were many out-of-date plants in this country, it was largely due to the fact that the State had taken from industry the funds that would otherwise have been available for the replacement of plant.
That is a perfectly definite opinion given by an eminent industrialist who was a very well-known and respected Member of this House and occupied high Government office during and just after the War. Let me give the Chancellor of the Exchequer two other solid arguments which should appeal to any Chancellor of the Exchequer. First of all, if the principle is admitted and relief from Income Tax given in respect of sums actually expended on the replacement of plant, it goes a very long way to meet what has been constantly urged in this House to my knowledge for over 20 years, and that is in relation to wasting assets. If all replacements of assets of that type, machinery and plant and the other things mentioned in the Clause,
were freed from Income Tax, that would clearly go a long way to meet the claims of those who have constantly advocated similar remission in respect of all wasting assets.
There is another question which has been raised again and again in this House. A large amount of the industry in this country's carried on by co-operative enterprises, which pay no Income Tax upon the huge sums placed to their reserves. Instead of urging successive Chancellors of the Exchequer to meet that discrepancy between co-operative enterprise and other enterprises, we support this Clause because it would go a long way to remove the grievance. In the year 1928, the latest for which I have figures, over £3,000,000 was placed to the reserve of co-operative enterprises. It is obviously very unfair that they should escape in that way and that there should be no remission in respect of sums placed to reserve for the installation and improvement of plant and machinery in the other industries of the country. To encourage the re-equipment of industry is clearly the most important thing that we can do at, the moment. It would find employment twice over, both to the man who works the machine when it is installed and to the man who makes the machine.
Eight days ago, when the Bill was in Committee, the Chancellor of the Exchequer said that our proposal would help the man who had made a profit and not the man who had not made a profit. That is a mistaken idea altogether. It would help the man who had not made a profit by improving the other industries which are enabled to re-equip themselves, and would undoubtedly create an increased demand generally throughout the country. The man who had not mule a profit might be the very man who was in the machinery trade and was able to make the machines required. It is impossible to have watertight sections of people and to say that you are not going to do a thing because it will help only one section. The complaint of the Chancellor of the Exchequer last week was twofold. He complained that the Clause as drafted was so wide that it would help even a man like an ice cream

vendor. Why not? The ice cream vendor is at one end of the gamut of industry, but if he has a dilapidated ice cream barrow, with no brass fittings or nicely plated name on it, and is doing bad business because he has unattractive plant, why should you not encourage even the replacement of that plant more rapidly than otherwise would be the case by not charging him Income Tax on it?

The right hon. Gentleman's other complaint was that the Clause would help only prosperous industries. The proposal is wide, I admit, and I am glad that it is wide. It is intended, broadly, over three years to relieve from Income Tax all sums actually expended in any industry in taking the most practical steps to give further employment to people. I cannot conceive how it could be possible to spend money from the Treasury more advantageously. The Chancellor of the Exchequer positively prefers to pay out enormous sums direct from the Treasury for the making of new roads and the like all over the country. From the Chancellor's own point of view, all the arguments that he has used in defence of his increase of Income Tax fall to the ground if it is a tax charged directly upon the needs of industry as well as upon the incomes of rich people. The right hon. Gentleman says that an increase in Income Tax from time to time is good for people rather than otherwise. He told us in another speech that the sort of industries he intended to hand over to national control were going concerns. This Clause asks that some provision shall be made to get industries going in the full sense of the word and to have them improved. From the point of view of fattening a goose before you kill it, I should have thought that the Chancellor of the Exchequer would have been delighted to spend money on the improvement of industries which some day or other he and his party hope to take under their full control.

Question put, "That the Clause be read a Second time."

The House divided: Ayes, 142; Noes, 246.

Division No. 440.]
AYES.
[7.44 p.m.


Acland-Troyte, Lieut.-Colonel
Allen, Sir J. Sandeman (Liverp'l., W.)
Atkinson, C.


Albery, Irving James
Allen, Lt.-Col. Sir William (Armagh)
Balfour, George (Hampstead)


Balfour, Captain H. H. (I. of Thanet)
Graham, Fergus (Cumberland, N.)
Remer, John R.


Beamish, Rear-Admiral T. P. H.
Grattan-Doyis, Sir N.
Reynolds, Col. Sir James


Bevan, S. J. (Holborn)
Grenfell, Edward C. (City of London)
Rodd, Rt. Hon. Sir James Rennell


Birchall, Major Sir John Dearman
Gretton, Colonel Rt. Hon. John
Ross, Major Ronald D.


Bird, Ernest Roy
Guinness, Rt. Hon. Walter E.
Ruggles-Brise, Lieut.-Colonel E. A.


Bourne, Captain Robert Croft
Hacking, Rt. Hon. Douglas H.
Russell, Alexander West (Tynemouth)


Bowyer, Captain Sir George E. W.
Hall, Lieut.-Col. Sir F. (Dulwich)
Salmon, Major I.


Boyce, H. L.
Hartington, Marquess of
Samuel, A. M. (Surrey, Farnham)


Bracken, B.
Harvey, Major S. E. (Devon, Totnes)
Samuel, Samuel (W'dsworth, Putney)


Brass, Captain Sir William
Henderson, Capt. R. R. (Oxf'd, Henley)
Sandeman, Sir N. Stewart


Briscoe, Richard George
Herbert, Sir Dennis (Hertford)
Savery, S. S.


Brown, Col. D. C. (N'th'l'd., Hexham)
Hills, Major Rt. Hon. John Waller
Shepperson, Sir Ernest Whittome


Brown, Ernest (Leith)
Howard-Bury, Colonel C. K.
Sinclair, Col. T. (Queen's U., Belfst)


Buckingham, Sir H.
Hurd, Percy A.
Smith, R. W. (Aberd'n & Kinc'dine, C.)


Burgin, Dr. E. L.
Hurst, Sir Gerald B.
Smith-Carington, Neville W.


Butler, R. A.
Iveagh, Countess of
Smithers, Waldron


Cadogan, Major Hon. Edward
Kindersley, Major G. M.
Somerville, A. A. (Windsor)


Cayzer, Sir C. (Chester, City)
King, Commodore Rt. Hon. Henry D.
Somerville, D. G. (Willesden, East)


Cayzer, Maj. Sir Herbt. R. (Prtsmth, S.)
Knox, Sir Alfred
Southby, Commander A. R. J.


Chapman, Sir S.
Lamb, Sir J. Q.
Spender-Clay, Colonel H.


Christie, J. A.
Lane Fox, Col. Rt. Hon. George R.
Stanley, Lord (Fyide)


Cobb, Sir Cyril
Law, Sir Alfred (Derby, High Peak)
Stanley, Maj. Hon. O. (W'morland)


Colfox, Major William Philip
Leighton, Major B. E. P.
Steel-Maitland, Rt. Hon. Sir Arthur


Colman, N. C. D.
Lewis, Oswald (Colchester)
Stuart, Hon. J. (Moray and Nairn)


Courtauld, Major J. S.
Little, Dr. E. Graham
Thomas, Major L. B. (King's Norton)


Cowan, D. M.
Llewellin, Major J. J.
Thomson, Sir F.


Cranborne, Viscount
Locker-Lampson, Rt. Hon. Godfrey
Titchfield, Major the Marquess of


Crookshank, Capt, H. C.
Long, Major Eric
Todd, Capt. A. J.


Culverwell, C. T. (Bristol, West)
McConnell, Sir Joseph
Train, J.


Dalkeith, Earl of
Macquisten, F. A.
Tryon, Rt. Hon. George Clement.


Dalrymple-White, Lt.-Col. Sir Godfrey
MacRobert, Rt. Hon. Alexander M.
Wallace, Capt. D. E. (Hornsey)


Davies, Dr. Veruon
Maitland, A. (Kent, Faversham)
Ward, Lieut.-Col. Sir A. Lambert


Davies, Maj. Geo. F. (Somerset, Yeovil)
Makins, Brigadier-General E.
Wardlaw-Milne, J. S.


Dawson, Sir Philip
Marjoribanks, E. C.
Waterhouse, Captain Charles


Duckworth, G. A. V.
Meller, R. J.
Wayland, Sir William A.


Dugdale, Capt. T. L.
Merriman, Sir F. Boyd
Wells, Sydney R.


Eden, Captain Anthony
Mitchell, Sir W. Lane (Streatham)
Williams, Charles (Devon, Torquay)


Edmondson, Major A. J.
Monsell, Eyres, Com. Rt. Hon. Sir B.
Wilson, G. H. A. (Cambridge U.)


Elliot, Major Walter E.
Moore, Sir Newton J. (Richmond)
Windsor-Clive, Lieut.-Colonel George


Erskine, Lord (Somerset, Weston-s-M.)
Morrison, W. S. (Glos., Cirencester)
Wolmer, Rt. Hon. Viscount


Everard, W. Lindsay
Nicholson, O. (Westminster)
Womersley, W. J.


Falle, Sir Bertram G.
Peake, Captain Osbert
Young, Rt. Hon. Sir Hilton


Ferguson, Sir John
Peto, Sir Basil E. (Devon, Barnstaple)



Ford, Sir P. J.
Power, Sir John Cecil
TELLERS FOR THE AYES.—


Ganzoni, Sir John
Pownall, Sir Assheton
Captain Margesson and Sir


Gibson, C. G. (Pudsey & Otley)
Ramsbotham, H.
George Penny.


Grace, John
Reid, David D. (County Down)



NOES.


Adamson, Rt. Hon. W. (Fife, West)
Cameron, A. G.
Gould, F.


Adamson, W. M. (Staff., Cannock)
Cape, Thomas
Graham, D. M. (Lanark, Hamilton)


Addison, Rt. Hon. Dr. Christopher
Carter, W. (St. Pancras, S. W.)
Graham, Rt. Hon. Wm. (Edin., Cent.)


Altchison, Rt. Hon. Craigle M.
Charleton, H. C.
Grenfell, D. R. (Glamorgan)


Alpass, J. H.
Chater, Daniel
Griffiths, T. (Monmouth, Pontypool)


Ammon, Charles George
Church, Major A. G.
Groves, Thomas E.


Arnott, John
Clarke, J. S.
Grundy, Thomas W.


Aske, Sir Robert
Cluse, W. S.
Hall, F. (York, W. R., Normanton)


Attlee, Clement Richard
Cocks, Frederick Seymour
Hall, G. H. (Merthyr Tydvil)


Ayles, Walter
Compton, Joseph
Hall, Capt. W. G. (Portsmouth, C.)


Baker, John (Wolverhampton, Bilston)
Cove, William G.
Hamilton, Mary Agnes (Blackburn)


Baldwin, Oliver (Dudley)
Daggar, George
Hardie, George D.


Barnes, Alfred John
Dallas, George
Harris, Percy A.


Batey, Joseph
Dalton, Hugh
Hartshorn, Rt. Hon. Vernon


Bellamy, Albert
Davies, Rhys John (Westhoughton)
Hastings, Dr. Somerville


Benn, Rt. Hon. Wedgwood
Day, Harry
Haycock, A. W.


Bennett, Capt. Sir E. N. (Cardiff C.)
Denman, Hon. R. D.
Hayday, Arthur


Bennett, William (Battersea, South)
Dickson, T.
Hayes, John Henry


Bentham, Dr. Ethel
Dudgeon, Major C. R.
Henderson, Arthur, Junr. (Cardiff, S.)


Bondfield, Rt. Hon. Margaret
Dukes, C.
Henderson, Thomas (Glasgow)


Bowen, J. W.
Duncan, Charles
Henderson, W. W. (Middx., Enfield)


Bower man, Rt. Hon. Charles W.
Ede, James Chuter
Herriotts, J.


Broad, Francis Alfred
Edmunds, J. E.
Hirst, G. H. (York W. R. Wentworth)


Bromfield, William
Edwards, C. (Monmouth, Bedwellty)
Hirst, W. (Bradford, South)


Bromley, J.
Edwards, E. (Morpeth)
Hoffman, P. C.


Brooke, W.
Egan, W. H.
Hopkin, Daniel


Brothers, M.
Forqan, Dr. Robert
Horrabin, J. F.


Brown, C. W. E. (Notts, Mansfield)
Freeman, Peter
Hudson, James H. (Huddersfield)


Brown, Rt. Hon. J. (South Ayrshire)
Gardner, B. W. (West Ham, Upton)
Isaacs, George


Brown, W. J. (Wolverhampton, West)
Gardner, J. P. (Hammersmith, N.)
John, William (Rhondda, West)


Buchanan, G.
Gibbins, Joseph
Johnston, Thomas


Burgess, F. G.
Gibson, H. M. (Lancs, Mossley)
Jones, F. Llewellyn- (Flint)


Buxton, C. R. (Yorks. W. R. Elland)
Gill, T. H.
Jones, Morgan (Caerphilly)


Caine, Derwent Hall-
Gossling, A. G.
Jones, T. I. Mardy (Pontypridd)




Jowett, Rt. Hon. F. W.
Morley, Ralph
Smith, Ben (Bermondsey, Rotherhithe)


Jowitt, Sir W. A. (Preston)
Morris, Rhys Hopkins
Smith, Frank (Nuneaton)


Kelly, W. T.
Morrison, Robert C. (Tottenham, N.)
Smith, H. B. Lees- (Keighley)


Kennedy, Thomas
Mort, D. L.
Smith, Rennie (Penistone)


Kenworthy, Lt.-Com. Hon. Joseph M.
Moses, J. J. H.
Smith, Tom (Pontefract)


Knight, Holford
Murnin, Hugh
Snell, Harry


Lang, Gordon
Naylor, T. E.
Snowden, Rt. Hon. Philip


Lansbury, Rt. Hon. George
Newman, Sir R. H. S. D. L. (Exeter)
Snowden, Thomas (Accrington)


Lathan, G.
Noel Baker, P. J.
Stamford, Thomas W.


Law, Albert (Bolton)
Oldfield, J. R.
Stephen, Campbell


Law, A. (Rosendale)
Oliver, George Harold (Ilkeston)
Stewart, J. (St. Rollox)


Lawrence, Susan
Palin, John Henry
Strauss, G. R.


Lawrie, Hugh Hartley (Stalybridge)
Paling, Wilfrid
Sullivan, J.


Lawther, W. (Barnard Castle)
Palmer, E. T.
Sutton, J. E.


Leach, W.
Perry, S. F.
Taylor, R. A. (Lincoln)


Lee, Frank (Derby, N. E.)
Pethick-Lawrence, F. W.
Taylor, W. B. (Norfolk, S. W.)


Lee, Jennie (Lanark, Northern)
Phillips, Dr. Marion
Thomas, Rt. Hon. J. H. (Derby)


Lindley, Fred W.
Picton-Turbervill, Edith
Thorne, W. (West Ham, Plaistow)


Lloyd, C. Ellis
Potts, John S.
Tinker, John Joseph


Logan, David Gilbert
Price, M. P.
Toole, Joseph


Longbottom, A. W.
Quibell, D. J. K.
Tout, W. J.


Longden, F.
Rathbone, Eleanor
Townend, A. E.


Lovat-Fraser, J. A.
Raynes, W. R.
Trevelyan, Rt. Hon. Sir Charles


Lowth, Thomas
Richards, R.
Viant, S. P.


Lunn, William
Richardson, R. (Houghton-le-Spring)
Walkden, A. G.


Macdonald, Gordon (Ince)
Riley, Ben (Dewsbury)
Walker, J.


MacDonald, Malcolm (Bassetlaw)
Riley, F. F. (Stockton-on-Tees)
Wallace, H. W.


McElwee, A.
Ritson, J.
Wallhead, Richard C.


McEntee, V. L.
Roberts, Rt. Hon. F. O. (W. Bromwich)
Watkins, F. C.


MacLaren, Andrew
Romerll, H. G.
Watson, W. M. (Dunfermline)


Maclean, Sir Donald (Cornwall, N.)
Rosbotham, D. S. T.
Wellock, Wilfred


Maclean, Neil (Glasgow, Govan)
Rowson, Guy
Welsh, James (Paisley)


McShane, John James
Salter, Dr. Alfred
West, F. R.


Mander, Geoffrey le M.
Samuel, H. Walter (Swansea, West)
Westwood, Joseph


Mansfield, W.
Sanders, W. S.
Whiteley, Wilfrid (Birm., Ladywood)


March, S.
Sawyer, G. F.
Williams, David (Swansea, East)


Marcus, M.
Scrymgeour, E.
Williams, Dr. J. H. (Lianelly)


Markham, S. F.
Scurr, John
Williams, T. (York, Don Valley)


Marley, J.
Sexton, James
Wilson, C. H. (Sheffield, Attercliffe)


Marshall, Fred
Shepherd, Arthur Lewis
Wilson, J. (Oldham)


Mathers, George
Sherwood, G. H.
Wilson, R. J. (Jarrow)


Matters, L. W.
Shield, George William
Winterton, G. E. (Leicester, Loughb'gh)


Melville, Sir James
Shiels, Dr. Drummond
Wise, E. F.


Messer, Fred
Shillaker, J. F.
Wood, Major McKenzie (Banff)


Middleton, G.
Shinwell, E.
Wright, W. (Rutherglen)


Mills, J. E.
Short, Alfred (Wednesbury)
Young, R. S. (Islington, North)


Milner, Major J.
Simmons, C. J.



Montague, Frederick
Sinkinson, George
TELLERS FOR THE NOES.—


Morgan, Dr. H. B.
Sitch, Charles H.
Mr. Allen Parkinson and Mr.




William Whiteley.

CLAUSE 3.—(Annual value of premises in London for purpose of duty on excise licences.)

Mr. MARJORIBANKS: I beg to move to leave out the Clause.
I move this Amendment for the purpose of asking the Financial Secretary to the Treasury what this Clause really means, and further of asking him whether he proposes to give any concession at all on this matter. I presume that the later Amendment in my name, which proposes to insert the words:
Provided that the provisions of this section shall not affect any right of appeal given by the Valuation (Metropolis) Act, 1869.
will not be called, and I suggest that the question arises on the present Amendment of whether the Government are going to allow, in this case, the right of appeal which at present exists under the Act of 1869. I think this Clause is
an example of ill-considered legislation. It proposes to apply to London the very obscure and difficult phrasing which was put into the Finance Act of 1924, without any discussion whatever, and without the Chancellor of the Exchequer even understanding what is meant. The Section which it is proposed to apply in this case is one of the most obscure and difficult Sections that has ever appeared in an Act of Parliament. When this Clause was discussed during the Committee stage the Chancellor of the Exchequer entirely misconceived its meaning and made a fundamental mistake as to its terms and purpose. The columns of the OFFICIAL REPORT record the mistake of the right hon. Gentleman. When he was challenged by me at considerable length to tell the Committee what the words meant and what their purpose was he said:
I have been asked what benefit this Clause will confer. At the present time in
London there is no appeal. I suppose there is an appeal for a person assessed in regard to a local assessment, but that is taken as the basis for Licence Duties and the Customs and Excise must take that as a basis."—[OFFICIAL. REPORT, 27th May, 1930; col. 1140, Vol. 239.]
The Chancellor of the Exchequer was entirely wrong in stating that there was no appeal. His whole case for this Clause was that there should be some new kind of appeal for the licence holders of this country to the Commissioners of Income Tax and he ignored the fact that in the Valuation Act of 1869—which gave one valuation for the purposes of Income Tax, of rates and of Excise Duty—there is an appeal and if the Financial Secretary wishes to challenge my statement I can refer him at considerable length to the relevant Section of the Act of 1869. If the hon. Gentleman consults that Act he will see, without the shadow of doubt, that through all these years the licence holders of London have had the right of appeal first to the assessment committee and then an entirely new appeal to quarter sessions. They had these two old rights of appeal and I may inform the Financial Secretary that the society which has been formed for the protection of the interests of licence-holders in London is unanimously of the view that these old rights of appeal should be retained.
We want this matter to be considered as part of the much more general question of the single valuation for London which will arise on a later Clause. We would like a concession on this matter to be part and parcel of the concession which we hope will be made by the Financial Secretary in regard to this whole question. We know that it is probably useless, in spite of the combination of the Liberal party and the Conservative party in the Lobby, to ask for a single valuation for London, but what we are asking for is a right of appeal to some court of law on these valuations when they have been assessed by the Income Tax Commissioners. We say that it is only right that there should be the old rights of appeal to a properly constituted court of law and not to experts appointed because they have special knowledge of the values involved. If the Financial Secretary is prepared to make us any concession on this matter I need not argue it further. There should
be this right of appeal for which I ask, both in regard to the licence-holders of London and the ordinary property-owners of London. The Chancellor's own excuse for this obscure Clause was that it offered a right of appeal which did not exist before, but, in fact, it substitutes for a good right of appeal to a court of law, where experts can be cross-examined in order that the truth may emerge, a new form of elaborate appeal to Revenue officials.
8.0 p.m.
In order to get at the true meaning of this Clause we have to go back to Section 12 of the Finance Act of 1924. When we come to consider that Section we are involved in obscurities. Anybody who consults Section 12 will be entirely at a loss as to what it means unless he gives it very careful study. First we have to consider that there are three values for this purpose. There is the Income Tax value of the premises, the rating value of the premises, and the Excise value of the premises. Those are three different considerations. The old Act of 1869 provided that there should be one valuation which would be inclusive, that there should be one appeal on all these questions to one court, and that, therefore, there should be one decision. But when we look at Section 12 of the Act of 1924 we find that
The annual value of any premises for the purpose of the duty on any excise licence charged by reference to the annual value shall be in Great Britain:

(a) the Income Tax value, if there is such a value applicable; and
(b) if there is no Income Tax value applicable"—

it shall be the value which any free tenant might give for the premises. We are told that the Income Tax value is only applicable where the licence value corresponds with the value of the premises for Income Tax purposes. By a definition in a previous Act premises used for purposes wholly unconnected with the licence do not correspond with the premises for the purposes of Income Tax. But all this is very difficult and complicated. Then when we come to Subsection (2) of Section 12 of the Act of 1924 we find that it is provided that apart from London
the person applying for any such excise licence as aforesaid may, if the income tax value applicable to the premises is the
amount of a rent paid for the premises, require the Commissioners of Customs and Excise to assess the annual value of the premises for the purposes of the duty to be charged on the licence as if there were no income Tax value applicable.
Can anything be more absolutely obscure than that? I took the Financial Secretary and the Chancellor of the Exchequer, on the Committee stage, through all the difficult stages of the meaning of this particular provision. But I myself was completely bewildered by the words:
if the Income Tax value applicable to the premises is the amount of a rent paid for the premises.
I have since made inquiries, and I find one rational explanation out of many explanations. Apparently, the purpose of the framers of this sentence was that where there was a tenant, for example, of a public-house in which he had acquired a special interest and where he was being asked an exorbitant rent by the landlord—the brewery—and the Income Tax authority took his rent as the Income Tax value, then it was thought that it was very unjust that that should be so and that he ought to be able to go and ask the Commissioners of Customs and Excise to assess his premises on the true value and not on the rent which he had to pay. All this, again, is very difficult, and this provision was forced through Parliament in 1924 by the representative, I understand, of the licence holders outside London. It was never understood by the Chancellor of the Exchequer at the time and that is applicable to this whole Budget. A particular branch of officials asks him to put what they say is a harmless provision for their protection into his Budget, and to puts it in, lock, stock and barrel, without any discussion at all.
The absurdity of the situation is increased when it is pointed out that the whole of this Section 12 could not possibly he applicable to Great Britain because the Metropolitan Valuation Act was still in force, but it is made to apply to Great Britain although licence holders are protected by the terms of a previous Act of Parliament. It is thought to set that right and to incorporate the whole of these provisions in regard to London. I will ask the Financial Secretary to say whether I am right, and if he has followed me in my definition of the meaning of this particular
section. One can only understand it if one studies it very carefully and I would ask the Financial Secretary to explain the meaning of that sentence. I would like to appeal to him to maintain the old rights of appeal which his chief said never existed but which have existed for 70 years—the right of appeal to Quarter Sessions. I shall urge this at a later stage on a much larger question. But I would point out here that the evil of a double valuation would be considerably decreased if we had the same court of appeal dealing with the two valuations. It is almost inconceivable that a court of law, when an appeal comes up, should decide on the value of the premises for two different purposes. It would be much more beneficial to the taxpayers and to the ratepayer, and the injustice would be much less, if the safeguard of the court of law existed, as it will not exist if you have two parallel courts of appeal. I am sorry if my arguments have been obscure, but, if they have, they are not one-half as obscure as this Section.

Mr. C. WILLIAMS: In rising to second the omission of this Clause which has been so ably proposed by my hon. and more or less learned Friend—[Interruption.] I am not questioning my hon. Friend's legal knowledge. I was going to come to that in a moment, but it appears that the only possible way in which one can speak without offence is to use the words "more or less" in this case. But I congratulate him on having made an exceedingly clear and a very able speech in favour of the rejection of this Clause. That is an example which might well be followed by many of the other legal Members of this House; they might well adopt the clarity with which he has explained a very difficult Section. May I ask the Chancellor of the Exchequer, or the Financial Secretary to the Treasury, or whoever is going to reply for the Government, one or two questions? Supposing this Clause is omitted, what would the Treasury do, because we can only really gauge the value—

Mr. PETHICK-LAWRENCE: The Treasury would gain.

Mr. WILLIAMS: Well, that is exactly what I want to know. I am sorry I did not put my question more clearly. I wanted to know what the Treasury would
lose by dropping this Clause. But now the Financial Secretary says that the Treasury are going to gain by dropping this Clause. Surely, something very queer must have come over the Treasury Bench if they propose to insert a Clause on which they admit they are going to drop a certain amount of money. Perhaps the Financial Secretary will tell us exactly what he is going to lose. In fact, he has promised to do so.
My next point is that my hon. Friend has referred to the fact that Section 12 of the Act of 1924 is one of the things which has to be cleared up to-day. I am not going into the whole Finance Act of 1924, but I would like to put this one point as an illustration of the perpetual trouble which has arisen because of the incompetence of that particular Act. Year after year, one provision after another, we have had to amend bits of that particular Act. Let this be a warning to hon. Members and, before we accept this Clause, let us be sure and obtain a very clear and adequate explanation. The other point I want to put is this. We have been told by my hon. Friend that ever since 1869 in this matter of rating and licensing there has been a definite appeal to the Quarter Sessions in the area which we are now discussing. That is an old right to which these people are well accustomed and under which they know exactly where they stand. Surely, before it is taken away from them we ought to have a very strong case indeed. Nothing appeals to the people more than rights which they have had for a very long time, and the Government, who are now proposing every form of oppression, intend to take away this particular right, but we ask that it may be preserved. I have no particular interest in this district. I do not represent a London area, but when I hear of old rights that have gone on almost from generation to generation being brutally abolished by the Chancellor of the Exchequer then I do say that the House should be given some adequate explanation.
When I used the word "brutally" in connection with the Chancellor of the Exchequer I noticed that it caused almost a smile of mirth to appear on the face of the Financial Secretary. That is the first gleam of mirth that has appeared on his face since his troubles of last. Friday, and if I have caused him mirth and have lightened some of his burden I
am glad. It has been pointed out that the different valuations of licences exist for different purposes. However it may stand as far as this Clause is concerned, the greater simplification you can get in the whole of these matters in connection with the making of an assessment the better it is for the industry. I know that simplifiaction is not welcomed by the Treasury, but it is liked by business and in this connection you should take the interests of business before the interests of the Treasury and before you indefinitely expand the amount of work to be done by the Treasury. Perhaps, before the Financial Secretary or the Chancellor of the Exchequer definitely turns down this Amendment and enforces the Clause on unwilling people, one of them, will give the matter full consideration on the points that have been raised by my hon. Friend and myself.

Mr. PETHICK-LAWRENCE: This is a very complicated matter, and I am not at all surprised that the two hon. Gentlemen who have moved and seconded this Amendment have somewhat failed to appreciate what we are doing in this Clause. The Clause is for the benefit of the taxpayer, and it is rendered necessary by Clause 29, which alters the method for Schedule A in London. If we did not put in this Clause 3 the effect of Clause 29 would be to put the London licence holder at a disadvantage compared with his fellow in the provinces. The object of this Clause is to give the London licence holder the same right that his fellow in the provinces already possesses. The hon. Gentleman who moved this Amendment, though he appreciated the law in one way, missed the point in another. At the present time in London, the valuation for purposes of rates and for Income Tax is one and the same, and there are certain rights of appeal attached thereto. By Clause 29 we separate the assesments for rates, which remain on the same basis as before, and the assessment for Income Tax, which ceases to be on the same basis as it has hitherto been in London., and is put on a basis similar to that which it has now in the provinces. Section 12 (2) of the Finance Act, 1924, provides a certain relief to licence holders in cases where it is necessary, as in the provinces.
It sometimes happens that the rent paid by a licence-holder is above the real annual value of his premises. I need not
into the reasons for that. In consequence of that, if the licence duty were charged on that excessive annual value, he would be put to an undue cost, and therefore in the provinces, where alone that would happen in times gone by, Section 12 (2) gave him a certain relief. It is not necessary in London, because, the valuation for rating being the valuation for taxing, he was already safeguarded in that respect. But the moment you withdraw that and put London in the same position as the provinces, the licence-holder might be put to an undue burden of taxation unless he had this provision. Therefore, in common fairness, in assimilating the procedure for assessing for taxation in London with that already in existence in the provinces, we have naturally thought it only right and proper to give the same opportunity to the London licence-holder that is already given to the licence-holder in the provinces.
The hon. Member who moved this Amendment wants to secure that there shall be an appeal to quarter sessions. If that is his object, this is the wrong place to do it. I notice on the Order Paper an Amendment in his name to Clause 29—in page 29, line 9, at the end, to insert the words:
Notwithstanding anything in this section or any repeal effected by this Act all rights of appeal given by the Valuation (Metropolis) Act, 1869, with regard to any property to which that Act applies shall continue to remain in force.
When we come to that, it can be argued on its merits, but the Amendment which the hon. Member proposes to insert into this Clause—in page 3, line 34, at the end, to insert the words:
Provided that the provisions of this section shall not affect any right of appeal given by the Valuation (Metropolis) Act. 1869.
even if it were carried, would not have the effect which he desires. The only way to achieve his purpose is to carry the Amendment which he has put down to Clause 29, which will secure the appeal to quarter sessions, not only for licensed premises, but for all premises that are dealt with there. I do not want to trespass on the Amendment which the hon. Member is to move next, but I will only say this—and I will deal with it in greater detail when he moves it—that an
appeal to the General Commissioners of Income Tax is provided already, and we think that that appeal meets the case. The licence-holder is given a special right in this Clause, a right similar to that which he already possesses in the provinces, and if he is not satisfied with what is given him, he will be able to bring his case before the General Commissioners.

Mr. A. M. SAMUEL: The Financial Secretary has made use of the expression that this is the wrong place to do what we are proposing to do—

Mr. PETHICK-LAWRENCE: This is an Amendment to leave out the Clause.

Mr. SAMUEL: Without expressing any opinion on the merits of the Clause, I say that this is a wrung time to do it, and I will give my reasons why I desire to leave out the Clause. So far as I understand Clause 3, it is a twin Clause to the old Clause 26, which is now Clause 29. That Clause, as I read it, means that assessments under Schedule A in London are in future to be based on the valuations to be made by the Inland Revenue, as elsewhere in England, and this is to apply to licensed premises in London. Clause 3, if passed in its present form, means that after April, 1931, Section 12 (2) of the 1924 Act will apply to London, as it applies to the rest of Britain. That is all very well. I have no objection to that, but why tinker with the law and why bring this Clause in and deal with licensed premises in London at a time when we have the Licensing Commission sitting? I am not going to find fault with the merits of the Clause, or controvert any of the arguments set forth by the Financial Secretary. But I say the Clause is inopportune and should be left out now.
I remember, when I was Minister for Overseas Trade, that one of the greatest difficulties we had in putting forward the "Come to Britain" movement was the shortcomings of British hotels. We found that we could not get the number of tourists here that we required, men and women who could spend vast sums with us without taking very much away from the country, except what they saw here, because of that fact. At that time endeavoured to get the hotel people to recondition their buildings and hotels, and I had some correspondence with the
then Home Secretary. They pointed out to me that the means and methods by which licence assessments were carried out—the thing with which we are dealing here—were so faulty, that no differentiation was made between what were purely hotels and inns, restaurants and bars in various types of buildings. The licences of those type of buildings, which look to the greatest proportion of their profits to come from alcohol, ought in their opinion, and in my opinion too, to be dealt with on lines entirely different from the lines on which the licences of hotels are dealt with. Yet we have this Clause. There are a number of hotels that depend to a very small extent, upon the profits from the sale of alcoholic drink. They must be licensed, because there are a large number of people who like a teaspoonfull of cheap claret and a little soda water and do not care to go to hotels where they cannot obtain that form of innocent drink; but the mere fact that these hotels are licensed places them upon a basis which involves them in an expenditure which renders them powerless to spend the money on improvements which otherwise they would do. And now we are confirming that practice.

Mr. DEPUTY-SPEAKER (Mr. Dunnico): The hon. Member is travelling very wide of the Amendment. The subject before the House is whether a system of valuation already in existence in all other parts of the country shall be applied to London. That is the sole issue before the House.

Mr. SAMUEL: I would be the last man to disobey your Ruling, and I will bring myself into order. Whether this Clause applies to London or elsewhere, I think it is a very foolish thing to bring it in at all. In view of the need for reorganising these hotels this Clause ought not to go forward and should be withdrawn. I do not say that because of any hostility towards the operation of the Clause, not because there is anything inherently wrong in it, but it is inopportune to bring it in when the Licensing Commission is considering the position. The Chancellor of the Exchequer ought not to put a millstone round his neck by passing legislation which may hamper what may be done as a result of the report of that Commission.
I am advocating this course in support of the Come-to-Britain movement and of getting hotels built in London without the hampering conditions as to licences which now exist.

Mr. DEPUTY-SPEAKER: The hon. Member is transgressing the Ruling I have laid down.

Mr. SAMUEL: I am sorry if I have offended, but for the reasons I have given and not for anything that is inherent in the Clause, I feel that the House ought to oppose the Clause.

Mr. ATKINSON: I accept every word that the Financial Secretary has said by way of explanation on this Clause, and I think it was very simply and clearly put. I cannot see that anything is to be gained by omitting the Clause. If we were omitting Clause 29 I should support whole-heartedly every word that has been said from this side of the House, but if Clause 29 is to stand then, in my opinion, this Clause 3 is necessary. As, however, there is no indication that the Government will vary their attitude on Clause 29, if they now said, "We will accept this Amendment," and were to cut out the Clause, we should be getting something we should not like.
There is a point I want to make leading up to the Amendment I have down later. What Section 12 of the Finance Act of 1924 did was to lay down not merely for the country apart from London, but for the whole of the country the principle that the duty on any excise licence charged by reference to the annual value should be based upon the Income Tax value. It operated differently in the country from how it operated in London. In London the Income Tax value was fixed under the Act of 1869, and appeals were allowed to the special sessions and the general sessions; but in the rest of the country appeals lay to the Commissioners of Customs and Excise and the general commissioners of Income Tax. But there was one exception created in that Section. Prima facie the Income Tax value was the rental value, and what Sub-section (2), the one that is incorporated in this Clause, did was this. It said, "It may very well be that the authorities have taken as the value a rental value which is really unfair"; and in that one event, and in that one event only, the licence
holder had a special appeal. He could appeal to the Commissioners of Customs and Excise to adopt a different value for assessing his Excise Duty than the value taken for Income Tax purposes. The Income Tax valuation remained but he was not bound by it in this particular case if he could get the Commissioners to say, "It is quite true that it is the value taken as the basis of assessment for Income Tax, but it is excessive, and for the purpose of calculating your Excise Duty we are going to re-value on a fairer basis." That right was given to him, and when by Clause 29 we say the licence holder is to pass out of the scope of the Act of 1869 we ought to put him on a level with the rest of the country. Unless we give him this special provision in Sub-section (2) we are going to put him in a worse position than other licence holders, and of course he protests that it would be unfair to do so. If we are going to interfere with the present position and put him in the position of other licence holders then as the Parliamentary Secretary says, logically we must give him the benefit of this Sub-section (2).
In Committee I ventured to point out that although we give him the benefit of Sub-section (2) we do not give him the benefit of Sub-section (3). Sub-section (2) give him the right of requiring the Commissioners of Customs and Excise to assess the annual value of the premises for the purpose of the duty, and Subsection (3) says that if he is dissatisfied with the annual value of the premises fixed by the Commissioners he can appeal to the General Commissioners of Income Tax. Unless we give him the benefit of Sub-section (3) as well as the benefit of Sub-section (2) we are not putting him in the same position as other licence holders throughout the country. I could have understood the argument that we did not need to incorporate Sub-section (2) as it might be implied.

Mr. PETHICK-LAWRENCE: Sub-Clause (3) of Clause 12 is for the whole country, including London, and therefore it is unnecessary to specify that it shall include London, because it would do so automatically.

Mr. ATKINSON: The difficulty in my mind was that in Committee I understood the hon. Gentleman did agree with
me that it would be wise to incorporate Sub-section (3). I can see a very interesting argument upon it. The argument which he would put up would be to say, "Is it not implied?" I am not sure that a very good answer would not be this. "After all, you have only incorporated Sub-section (2). If it was really meant that there was to be an appeal from decisions given in Subsection (2) why do you not also incorporate Sub-section (3)?" I do not want to be dogmatic about it, but those who have had much to do with construing these rather abstruse Sections a court of law know that a worried tribunal says, "Why could not Parliament say what it meant? Why has it left it in doubt? Would it not have been very easy to put after the (2) 'and (3)'?" if we are told that the opinion of the Government represents the considered opinion of the authorities I will not trouble to move my Amendment. At any rate I have this assurance, that so far as intention counts for anything—though, of course, it does not count for anything—it is intended that Sub-section (3) is to apply to cases arising under Sub-section (2). If that is the result of the debate, then I shall not move my Amendment, and, so long as Clause 29 stands, it is all to the good.

Captain CAZALET: As far as I can gather, this Clause is a concession to certain individuals in London. Could the Financial Secretary tell us the extent of this concession?

Mr. PETHICK-LAWRENCE: This proposal simply gives the justice which these people are entitled to under Clause 29. With regard to the point raised by the hon. and learned Member for Altrincham (Mr. Atkinson), may I explain that Subsection (3) will apply to London the moment you have done away with the limitation in Sub-section (2) which excludes London. In that case Sub-section (3) will apply to London.

Amendment negatived.

CLAUSE 10.—(Amendment as to relief in respect of life insurance premiums.)

Mr. A. M. SAMUEL: I beg to move to leave out the Clause.
The necessity for moving this Amendment has arisen in consequence of the change which was made in the rate of Income Tax. We discussed this Clause
at some length in Committee, so I will avoid going over the points with which we have already dealt. On the Committee stage I put down an Amendment which expresses what I then thought would meet the difficulty. It read as follows:
Provided that relief shall not be granted at a greater rate than the maximum rate of Income Tax payable by the taxpayer.
During the discussion in Committee on 5th June, 1930, the Chancellor of the Exchequer said:
Of course, I do not like to be committed in detail. I do not say that to the minutest detail we shall be able to meet all these points, but we will make every effort possible to meet what is, I think, intended in the Amendment of the right hon. Gentleman the Member for Farnham."—[OFFICIAL REPORT, 5th June, 1930; col. 2445, Vol. 239.]
To meet that, the Chancellor of the Exchequer has put down the following Amendment—in Clause 10, page 7, line 15, to leave out from the word "if," to the end of the Clause, and to insert instead thereof the words:
at the end of sub-section (3) there were inserted the following new paragraph:—
(f) shall, as regards premiums or sums in respect of which the claimant would but for this restriction be entitled to an allowance at halt the standard rate of tax, be given at a rate of tax greater than four-ninths of the standard rate—

(i) where the taxable income of the claimant does not exceed two hundred and fifty pounds; or
(ii) where the taxable income of the claimant exceeds two hundred and fifty pounds in respect of the amount, if any, by which the premiums or sums exceed the amount by which the taxable income exceeds two hundred and fifty pounds;

In this paragraph the expression 'taxable income,' in relation to any person, means the total income of that person, estimated in accordance with the provisions of the Income Tax Acts as they apply to income tax chargeable at the standard rate less any amount on which he is, by virtue of sub-section (1) of section forty of the Finance Act, 1927, entitled to relief by way of a deduction of tax.
With your permission, Mr. Deputy-Speaker, if you will preserve my rights I would like to incorporate my remarks on Clause 10 with my criticisms of the Chancellor's amendment in order to bring them into line with the Chancellor of the Exchequer's Amendment and save time.

Mr. DEPUTY-SPEAKER: It might be for the convenience of the House if we took the full discussion on this Amendment, and avoided a lengthy discussion on the Amendment standing in the name of the Chancellor of the Exchequer.

Mr. SAMUEL: The famous Dr. Abbott, of the City of London School, once wrote a book which I believe is on the desk of every civil servant entitled "How to write clearly." Let us examine the clear English of paragraph (ii).

Mr. SNOWDEN: I do not understand how this proposal deals with the Amendment. I should have thought, seeing that the Amendment to leave out the Clause altogether has been abandoned, it would have facilitated discussion if I moved my Amendment first.

Sir D. HERBERT: I would like to say a word on that point. The Amendment in the name of the Chancellor of the Exchequer would alter the nature of Clause 7, and we desire to ask the right hon. Gentleman to give up the whole Clause. For the purpose of that discussion, Are want to consider Clause 10 in the form in which it will appear after the Amendment of the Chancellor of the Exchequer has been added. If we had been in Committee, then we might have assumed that the Chancellor of the Exchequer's Amendment had been carried, and we could have dealt with it on the Question. "That the Clause stand part of the Bill." We want an opportunity of discussing Clause 10 in the form in which it will appear in the Bill after it has been amended by the Chancellor of the Exchequer's Amendment.

Mr. DEPUTY-SPEAKER: What I had in mind was that in substance both the Amendment to leave out the Clause and the Chancellor of the Exchequer's Amendment the same issue is raised. The only proposal which I made to the House was that while we should take a full discussion on the Amendment to leave out the Clause, and that in discussion of the subsequent Amendment we should not go over the same ground again.

Sir ARTHUR STEEL-MAITLAND: Our reason for desiring to take a discussion on Clause 10 is that the Chancellor of the Exchequer went a very long way towards meeting some of the arguments which we brought forward during
the Committee stage. We think that, after putting the whole case again, the right hon. Gentleman might with to meet the extra cases, which are not financially so important as the concessions which he has already made. In those circumstances, the logical course would be to take a discussion on the whole Clause to see if we could persuade the right hon. Gentleman to take an extra step. If the right hon. Gentleman could see his way to do that, we should not be placed in the position of having to oppose the concessions of the Chancellor of the Exchequer afterwards, which we have no wish to do. Of course, we should not want to take the same debate twice over.

Mr. P. SNOWDEN: I am not quite clear that the plan suggested by the right hon. Gentleman would serve the purpose which I think we have at heart. I take it that the point that the Opposition want to raise is in regard to the allowance for life insurance premiums to persons affected by the half-rate. If my proposed new Clause, as I might perhaps call it, were discussed, with the Amendment to leave out paragraph (ii), that would be acceptable. I want to adopt that course which is likely to make the discussion most practical—to confine it., as it were, to the real gist of the matter that is in dispute with us. I do not mind at all what form we adopt, provided that it is likely to serve that purpose.

Sir A. STEEL-MAITLAND: I do not think that our point of view would be met even if the Chancellor of the Exchequer were to abandon paragraph (ii), which I think, in proportion, is not the main point. We object to paragraph (i) as well as paragraph (ii), and, therefore, if the discussion were on the whore question, the Chancellor of the Exchequer could take his own decision with regard to the arguments which we laid before him, and, after that, if he carried his point with regard to the whole Clause, we should not wish to repeat the discussion on the Amendment which he proposes, and which, from our point of view, we should be prepared to accept.

Mr. A. M. SAMUEL: I feel that the Chancellor is not hostile. We merely want to get at the facts. In the first place, let us try to understand what is in his mind in putting down these two
paragraphs, (i) and (ii). I take it that he is endeavouring to carry out faithfully the undertaking which he gave on the 5th June. I know that the right hon. Gentleman takes exception to the statement I recently made that I spent half-a-day trying to understand a Clause, and that he regards me as, perhaps, not competent to understand English. I will ask him and the House to try to understand what these paragraphs mean. Paragraph (i) read as follows:
where the taxable income of the claimant does not exceed two hundred and fifty pounds.
That is plain enough, but paragraph (ii) offends against every canon of reasonable drafting, against everything that Doctor Abbott laid down about clear English. I will read it:
where the taxable income of the claimant exceeds two hundred and fifty pounds in respect of the amount, if any, by which the premiums or sums exceed the amount by which the taxable income exceeds two hundred and fifty pounds.
I am incapable of understanding what this means, although I have tried to understand it. I solve it by guessing that it means that, if the man pays on £250, he only gets 2s. in the £ off his premium, but, if his taxable income is £280, and he pays a premium of £30—I take that as an example—his relief is to be at the rate of 2s. 3d. in the £ on his life insurance. I speak subject to correction, and I should be perfectly prepared to hear the Chancellor of the Exchequer say that I am quite wrong. Anyhow, I do not think that many Members on this side of the House have understood what this paragraph means. If it means what we think it means, I think it is bowled out by Section 32 of the Income Tax Act, 1918. I understand paragraph (ii) to mean that, if a man's taxable income is £280, and he pays an insurance premium of £30, his income is to be deemed to be £280, and he is to get an allowance of 2s. 3d. in the £ on £30. If that be so, it is entirely nullified by Section 32 of the Income Tax Act, 1918, and I want to know how the Chancellor of the Exchequer is going to get over this difficulty. Section 32 of the Income Tax Act, 1918, says that:
(1) Any person—
(a) who has made an insurance on his life
shall be entitled to a deduction of the amount of the annual premium"—
and so on. Then Sub-section (3) says:
No such allowance—
(b) shall entitle any person to claim any exemption, abatement or relief on the ground that his total income is thereby reduced below any standard amount.
Unless that Section of the Act of 1918 is cancelled, the Chancellor of the Exchequer's paragraph (ii), if my reading of it is correct, will not be operative. Besides, what happens if the premium is £35 and the taxable income £280?
These reliefs in regard to Income Tax on life insurances are almost vested interests, or, if not vested interests, at any rate an understood inducement under the report of the Royal Commission of 1920. The purpose of such reliefs, according to the report of the Royal Commission, is to encourage life insurance, and I would say here, as the Chancellor of the Exchequer seems to have twisted my words about so as to make me say that I would advocate anything to help or favour life insurance companies, that that is not so. I say again that the reason why we wish to stimulate life insurance is purely on the ground of public policy. It is a form of thrift which cannot be bettered. I am aware of the advantages of building societies and savings banks, but the Royal Commission said that one of the most healthy things that have appeared in the last 70 years has been the considerable growth in life insurance, and they took into consideration the benefit which would accrue to the public and the nation by the encouragement of real life insurance, and, therefore, advocated this relief.
They did so, however, for another reason which is not so well known, and which has barely been referred to during these debates. They realised that it was necessary to adjust the overcharge in the way of Income Tax on life insurance premiums in the case of the life insurance companies. I will explain what that means. A large number of people who take out life insurances are people with small incomes, so that the total amount of Income Tax due from them is, perhaps, on an average, only 1s. 6d. or 2s. in the £ in relation to the present standard rate. These people, as I said
earlier in the debate, pay their premiums to the life insurance companies, who invest these premiums, and those premiums form the reserve funds upon which the life insurance policies rest. These funds, with their yield of income, pay interest and dividends, and they provide the sum which is paid on a man's death or endowment date; but these sums bear, not the rate of Income Tax that is applicable to the small man's income, but, after deducting some small amount for expenses, the full rate of Income Tax.
The consequence is that a large number—the main body—of small policyholders are being charged Income Tax on the funds which belong to them, and which are in the hands of the insurance companies, at a rate which the State has no right to take from them. They are perhaps taking 4s. 6d. minus the allowance made for expenses for running the insurance companies, whereas in the individual capacity of the man who takes out the policy he can only be charged perhaps 1s. 6d. or 2s. Therefore, the Chancellor is making no concession to this man. He is only doing what an honest man must do. He is taking what is arranged by law in the form of Income Tax from the life insurance fund a rate of tax which he ought not to take from the policy holders individually, and, therefore, the State is countenancing a relief in respect to the Income Tax of small policy holders in the first place to encourage them to be thrifty and, in the second place, to restore to them in some measure what has been taken away from them improperly.
What will the Treasury lose if it wipes out the Clause? The most that the Treasury can surrender a claim to is the amount applicable to small policies after the big ones have been let out by the Amendment. The Chancellor is letting out the big men. I am not fighting for the big men. We on this side are fighting for men whose incomes are £200 or £300 a year. The Chancellor has admitted the justice of what we said in an earlier debate. He said he was trying to see that those who pay a small Income Tax shall get correctly proportionate relief and, in doing that, he has let out entirely the pre-1916 policy holders, and the post-1916 policies of big insurances. What is the whole amount at stake? He gave it on 5th June at £500,000.
£500,000 in all, but the amount that would be taken from each individual would be very small."—[OFFICIAL REPORT, 5th June,.1930; col. 3440, Vol. 239.]
He went on to say that £150,000 of that was in the pre-1916 premiums. The amount, therefore, is £350,000 after you have taken out the pre-1916 policies. The amount at stake is only £350,000 before you let out the big men, and now that you have let out the big post-1916 men it is only a trumpery sum left at stake. It is a grave injustice to the little men, and the insurance people say this withdrawal of the old relief will be a blow to insurance and will reduce what they have held out as an inducement for the small men to insure. Imagine what will happen if by any chance, whatever party is in, it may be necessary to raise the Income Tax. Are you going to rearrange the whole thing if you get next year a tax of 5s.? Are we to change the Clause and make it four-tenths instead of four-ninths'? What a muddle!
9.0 p.m.
The Clause ought to be withdrawn for another reason. The Government is to deal with men whose taxable income does not exceed £250. The lower a man's income is, the greater claim he has to increase of relief in respect of tax upon his premiums, because the poorer a man is, the smaller the rate he ought to be charged in respect of funds, which are charged at the full rate when in the hands of the insurance companies. The premiums belong to the man though they are in the hands of the insurance companies. They are accumulated till his death and they are paying between 3s. 4½d. and 4s. 6d., yet it would appear that the Chancellor would prevent these men getting back what is due to them, and the poorer they are the greater the claim they have on the relief allowance. He made the point the other day that he was making a concession to poor men in that he was going to raise the first taxable income from £225 to £250 and was going to charge these not very prosperous people only 2s. instead of 2s. 3d. and, therefore, we ought not to grumble on their behalf that they are not getting the full benefit of this insurance relief. What an argument to use! Why should the thrifty who have taken out insurance policies be compelled to surrender part of the benefit of the £250 at 2s. because they are thrifty?
A man who has not taken out a policy gets the whole of the benefit of the relief which the Chancellor has put down based upon the £250 at 2s. in the £, but directly he takes out a policy the Chancellor says, "I will punish you and take some of the relief back." That is a very bad argument, and when he sees how we have shown the blemishes in his own Clause, I think he will say there is a good deal to be said for the point of view we have taken. We are not fighting for the millionaire. We are fighting entirely for the little man. The Government has given way to those who have incomes beyond the amount defined by the Chancellor's Amendment, but he leaves a grave injustice on men of small means. Perhaps there are 500,000 men who have small incomes who may be hurt by the retention of this Clause. I hope the country will take note that we have made a fight to save the rights of these small men who hold small policies, and that the Chancellor has tried to take away what we think they are entitled to.

Sir D. HERBERT: I beg to second the Motion.
I know the Financial Secretary has seen representatives of the life insurance offices and gone into this matter very carefully indeed with them, and I have not the least doubt that the right hon. Gentleman has had reported to him exactly the views of the life insurance offices on this Clause. I want to make my appeal to the Chancellor simply a reinforcement of the very carefully thought out arguments that were put before the Financial Secretary by these great experts in life insurance matters. The first, of course, is that relief is given in respect of insurance premiums, as shown by the report of the Royal Commission on Income Tax, for two reasons, one to encourage life insurance, and the other to redress the overtaxation resulting from the taxation of funds in the hands of the life offices. The life offices have authorised me to state this as the considered opinion of the Life Offices Association, that they think if this Clause were passed in its amended form it would be a very serious blow to life insurance.

Mr. P. SNOWDEN: Nonsense!

Sir D. HERBERT: The right hon. Gentleman, at any rate, is saying that not to
a statement of mine, but to a statement by the representatives of the life offices, the people who are the greatest experts on that subject. If the right hon. Gentleman says that their opinion is nonsense, I can only ask the House, with great respect to the right hon. Gentleman, to say whether on a matter of this kind the opinion of these men is not worth more than the opinion of any Chancellor of the Exchequer. It is not very difficult to see one reason why this is going to be a blow to life insurance. The life offices have found in past years that one of the most useful forms of advertisement to persuade people to insure their lives has been the statement on the face of the prospectus or proposal form that the insured would get a rebate of half the standard rate of the Income Tax in respect of the premiums paid. I want to urge upon the Chancellor of the Exchequer and upon the House that, at any rate, it is the view of these people who ought to know more about it than anyone else. The Chancellor of the Exchequer in his speech in the Committee said:
If I thought the proposals in this Finance Bill were going to strike even the mildest blow at the thrifty habits of the people I should be quite prepared to sacrifice the comparatively small revenue which the Exchequer receives."—[OFFICIAL REPORT, 5th June, 1930; col. 2441, Vol. 239.]
The right hon. Gentleman has been good enough, in reply to arguments brought forward in Committee, to make a very considerable concession upon this Clause, but the remarkable part of it is, that, having made that concession, we find that the Clause in the revised form will have a result which surely the right hon. Gentleman could hardly wish. It is, on the face of it, a restriction of relief—or in other words equivalent to an increase of tax—a restriction of relief in respect of rebates on insurance premiums on the poorest class, namely, those whose incomes do not exceed £250 a year. The right hon. Gentleman, by the concession which he has made, has given up the greater part of the money involved, and I suggest to him very earnestly that nobody in this House wants at the present time to increase the burdens or to reduce the relief to those whose incomes are only some £250 or £300 a year. It is really on those grounds that we ask the Chancellor of the Exchequer to go
a little further than he has done. We say that he has already given away the greater part of the comparatively small amount involved in the Clause as it originally stood. The remainder which we are now asking him to give up if he does not give it up, will come out of the pockets of those whom he has endeavoured to relieve in other respects. He will in this case lay himself open to the accusation which he has thrown across the Floor of the House to others of taxing the poor instead of the rich. It is really a case in which we hope that the Chancellor of the Exchequer will on this occasion accept the very definite opinion of the life offices, that if he goes on with this Clause he will be striking a blow, which is far more than "the mildest blow" to which he referred, at the habits of the people in life insurance.
There is only one other thing which I want to say, and that is that, in regard to paragraph (f ii) in the right hon. Gentleman's Amendment, I rather gathered—I do not know whether I was right—that he was prepared to give way on the matter. We considered the matter yesterday evening in conjunction with mathematicians and others, and I came to the conclusion that I understood the meaning of it, but I should hesitate to try and explain it to the House now. I suggest to the right hon. Gentleman that there would be more money spent on lawyers' fees and upon litigation in finding out the meaning of that very complicated little paragraph than the money which would be involved in it. If the Chancellor of the Exchequer will not give us what we ask and let the Clause go altogether, I hope he will leave out that very difficult and complicated paragraph which I do not think will mean very much.

Mr. PALMER: I appreciate the disposition of my right hon. Friend the Chancellor of the Exchequer in desiring to meet the insurance industry on this particular point, but the more I examine the Amendments on the Order Paper the more I feel that we are making confusion worse confounded. It appears to me that we have gone astray on a very vital and cardinal principle on a very small point as far as life assurance business is concerned. There was a time when the whole amount of the Income
Tax was allowed against life assurance premiums. It is true that at that time the Income Tax was only up to 3s. in the £. We need not go into ancient history on the matter; suffice it to say that for a long time there has been in the legislature a determination to give relief in respect of life assurance premiums. Indeed, to do the Chancellor of the Exchequer full justice, I do not think that he ever intended that it should be otherwise, but in framing his Finance Bill and his Budget proposals he seems to have stumbled over a point where he fancies that he might be rendering a rebate in excess of what the taxable limit might be upon an individual. I do not think that that can ever arise. There is no fund provided for the purpose, and there is no method of paying any excess from the Treasury to the insured person.

Mr. A. M. SAMUEL: No money can be got back again.

Mr. PALMER: My right hon. Friend said in his Budget speech:
As regards life insurance allowance, I propose to leave the old rates of 2s., 3s., and 4s., unchanged. For the overwhelming majority of taxpayers the gain from the change of graduation will be found to outweigh any loss due to the retention of the old rates of life insurance relief."—[OFFICIAL REPORT, 14th April, 1930; col. 2676, Vol. 237.]
He therefore postulates a loss by this change in respect of the relief, because he says that the other thing will outweigh any possible loss. The relief to which he refers, which is to outweigh any loss on the relief in respect of life insurance premiums, is common to the whole taxable community, whether they are insured, or not, and I think it is doing violence to the principle of giving special relief in respect of life assurance. The people who do not see the matter from the life assurance point of view, may say: "Why all this fuss about the difference between 2s. and 2s. 3d.?" I would not be disposed to raise my voice much as to the difference between 2s. and 2s. 3d., but I do want to raise my voice against the change of principle.
If we go back to the 1920 Finance Act we find that a Royal Commission had sat on this subject and they came to the principle of using a common denominator of one-half, one-fourth, and so on. That is simple, because if at any time we
should be in the happy position of securing a reduction in the Income Tax—I hope the Chancellor of the Exchequer does contemplate that—these common factors would operate far more simply and fairly than the insertion of figures such as 2s., 3s., and 4s., as the Chancellor of the Exchequer suggests. Would my right hon. Friend have contemplated an alteration of the principle of using a common denominator of one-half, had there been a reduction in Income Tax? I do not think that he would have inserted, for instance, 1s. 9d., or half the standard rate of Income Tax, had the Income Tax this year been reduced to 3s. 6d. It may seem a small point, but I have noticed that each speaker on this Amendment has been vague and confused. Even the hon. Member for Watford (Sir D. Herbert), who ought to understand legal jargon as well as anybody, confesses himself rather doubtful As a man who never pretended to understand the Clause as drafted, I say that this confusion is an added reason why we should get down to the simple denominator, and say whether it should be one-half or one-fourth at a certain point of Income Tax.
I hope that we shall be able to look to my right hon. Friend with some degree of confidence that his real intention will not be frustrated by putting in the complexity of his proposed Amendment. It would be a very small matter if he accepted the Amendment to delete Clause 10. That would give us the status quo so far as the principle is concerned. The money for premiums for life insurance is in a very different category from the money that people spend in consumable commodities. When you put £50 or £100 into life insurance it is a very different proposition from putting £50 or £100 towards the cost, say, of a motor car, which will depreciate 50 per cent. in a year and will be reduced to zero perhaps in four years. The money for life insurance is going into the funds of the big business institutions, which are subject to taxation at the higher rate. The money, after it has been taxed year after year in the funds of these big institutions, comes back again to the policy holder or to his assignees or heirs in the event of his death, and there again it meets with the incidence of taxation so far as Death Duties are concerned.
There is an overwhelmingly justifiable reason why we should not make the position any worse than it is, so far as the principle is concerned. The Act of 1920 arose out of the Royal Commission, and this matter was gone into very exhaustively at that time. Among the members of that Royal Commission was my right hon. Friend the President of the Board of Trade. Nothing has happened in the interim which requires the Chancellor of the Exchequer to amend the Act of 1920 so far as the principle is concerned. The reasons are overwhelming why the present Government, through the Chancellor of the Exchequer, should maintain the attitude of encouraging thrift, for the benefit that it brings to the policy holders and also for the relief that it brings to the nation itself, which would have to make a very much larger provision in respect of its social services but for the thrift that is being practised under the life insurance business in this country. For that reason, I hope that the position will be reviewed by my right hon. Friend arising out of this discussion. I understand it is the intention to take the full range of discussion on the whole Clause, and I hope we shall reach a conclusion such as I have suggested. Quite frankly, and with the best will in the world not to embarrass the Chancellor in this matter, my advice to him would be that he should accept the Amendment, and that the Clause should be withdrawn.

Major HILLS: I quite agree with the last speaker as to the importance of life insurance, and I think he will agree with me that this country, as a country, is very much under-insured. If you compare the amount of life insurance here with that of the United States, you will see that there is a very remarkable and disquieting difference. It is partly for that reason that I appeal to the Chancellor as strongly as I can and, with some confidence, put before him exactly the effect of his amended Clause. He is withdrawing a concession and therefore increasing the burden where the concession is withdrawn. He increases that burden to the greatest extent on those with the smallest incomes. If the income of a taxpayer is less than £250 a year, the whole force of the reduction in the relief falls on him, for the only rebate that that taxpayer gets is at the rate of
four-ninths of the standard rate. As the income gets greater, the burden gets less, so that the heaviest burden is thrown on the poorest. As you rise over £250 a year, slowly the extra burden gets less until at a certain point in the income the burden ceases altogether, and persons with high taxable incomes are put back to the conditions of 1920. I do not believe the Chancellor means that or wishes that the whole cost of this denial of relief should fall on persons with the poorest incomes, and yet that is the effect.
I, like my hon. Friend the Member for Watford (Sir D. Herbert), have spent some difficult times in working out the mathematical answers to Sub-sections (1) and (2), and I can assure the right hon. Gentleman, unless I am very much mistaken and have quite misinterpreted Subsection (2), that the extra burden he is imposing on the backs of the Income Tax payers decreases as a man gets richer. I know that the excuse that will be made in extenuation of that will be Clause 9 of the Finance Bill which, of course, gives extra concessions to persons of smaller incomes. I quite agree, but as the hon. Member for Greenwich (Mr. Palmer) said so forcibly, these concessions are not confined to the policy holders, but are given all round and all persons with incomes under a certain rate will receive these concessions. It is really a little bit ungenerous to give with one hand and to withdraw with the other, and especially is it unfair when the withdrawal is made from certain classes of taxpayers only who are told that they are not going to be given the whole of the concession.
Look at the position. The Royal Commission of 1920 expressly related rebates to the taxation of the reserves of life offices. Take the case of a mutual company, where there are no shareholders and no profits in dividends, but the premiums all belong to the members, and after they have paid the amount due on the policies, all the reserves belong to the members. The more you increase taxation and the more at the other end you give remissions, the greater the gap between what the taxpayer pays and the standard rate. Those reserves will all have to pay the full 4s. 6d. in the £ and the majority of the holders of those reserves are not taxable at that rate. So these smaller incomes deserve to have a
bigger concession. I am not pleading for the bigger incomes. I think the Chancellor's full intention's are not expressed in Sub-sections (1) and (2). It is a fact that the greater burden is laid on the weaker backs.
Finally, for how much is the Chancellor doing this? The whole of the money brought in by the original Clause 10 was £500,000, and of that £150,000 a year was brought in by the changes in relation to pre-1916 policies. A sum of £350,000 a year is left. How much of that is taken away by the concessions that are contained in the present Amendment of the Chancellor? Surely a very large amount. Surely he is giving away a very large part of that £350,000. I do not believe that more than quite a small fraction of it will be left, and, since he has gone so far, cannot he go further? I know that when a Government makes a concession it is sometimes an ungenerous thing to try to press for more, but I believe the thing is so small and is not worth the trouble it will create, and that the Chancellor has meant to do more than the Clause actually does. I do sincerely believe that the Clause does the tiling in the wrong way, and, in view of the very small amount of money involved, I do appeal to him to grant a concession and to withdraw the whole Clause.

Mr. P. SNOWDEN: The right hon. Gentleman who has just sat down said quite truly that it did appear to be rather mean, after a generous concession had been made, still to press for more. That is the feeling I have had during the whole time I have been listening to this debate. It has been said that the amount of money at stake is not very large. It is not a very large sum in relation to the amount of taxation that we have to face, but at any rate it is not a negligible sum. I want to call the attention of the House to what took place in Committee. The hon. Member for Farnham (Mr. A. M. Samuel) has made discoveries since the Committee stage of the Bill, because on that occasion, along with other Members, he accepted my contention that taxation should not be remitted on account of life insurance premiums at any higher rate than the rate at which a person actually pays. That was accepted in every part of the House, and, as proof of that, the hon. Gentleman has on the Paper to-day an Amendment to the effect that no allowance
should be made at a greater rate than the rate of the tax which had been charged. The right hon. Member for Lichfield (Sir A. Steel-Maitland) questioned the statement I made as to the general and unanimous opinion of the Committee when this matter was raised.

Sir A. STEEL-MAITLAND: It was general but not unanimous.

Mr. SNOWDEN: It is rather cruel after the speech of the right hon. and gallant Member for Ripon (Major Hills) to call him in support of the case I am now mentioning. The right hon. and gallant Member referred to this question of allowances where the taxpayer pays a tax at only 2s. in the £, and he said:
Nobody on this side of the Committee wants that.
May I quote the opinion of my predecessor, the right hon. Member for Epping (Mr. Churchill), who said:
We on this side have never sought to leave the right hon. Gentleman in the anomalous position of having to allow a rebate at 2s. 3d. on income which is chargeable only at 2s. We wish to meet him on that.
What has taken place in the meantime? The life assurance offices have been very actively at work. I suspect that they did raise this point in the brief which they sent to Members of Parliament during the Committee stage, but Members of Parliament do not appear to have then understood it and, therefore, the point of view of the life assurance companies was not clearly stated. There has been, I believe, a large meeting of members and the representatives of the life assurance offices within the last few days; hence the changed attitude of hon. Members on the other side of the House. Of course it is the business of life assurance companies to get as large concessions as they possibly can and then to use them for advertising purposes, but who would maintain that a man is influenced as between taking out a life assurance policy or not by the matter of a few coppers or a few shillings; and in no case amongst the cases we are now considering can the difference amount to more than a few coppers. If a man has a taxable income of £250 a year and he pays the big premium of £50 a year for a life assurance policy the difference would only amount to 50 threepences.

Sir A. STEEL-MAITLAND: It is taxable income which is chargeable.

Mr. SNOWDEN: I agreed when the matter was under discussion in Committee to consider what could be done, but we were then all under the impression that what the Committee wanted was a proposal which would cost about £150,000 a year; and I used the words which have been quoted, that if £150,000 a year would avoid a blow being struck I would be willing to make the concession. But I also said that I would not commit myself to any details and I am quite sure that the House will agree with me that in no case was the concession which I promised to consider to amount to the enormous sum of £400,000 a year. The sum of £150,000 was mentioned, and that was in the minds of hon. Members during the Committee stage and what I undertook to consider, without committing myself to details, was how I could make that concession amounting to £150,000. When we came to go into the matter we found that it was impossible to deal with it in regard to pre-1916 policies and post-1916 policies, except on the lines of the Amendment I am now moving and reluctant as I was to incur that additional expense, or rather to lose that amount of revenue, I said that I had given a pledge to the House of Commons to consider this matter. Although we probably did not clearly realise what it would involve, the House of Commons is expecting that I should make the concession and therefore I will give it, although on examination it will cost a great deal more than I expected. May I say a word about limiting the rebate to 2s. instead of 2s. 3d.? The hon. Member for Farnham (Mr. A. M. Samuel) used some rather strong language about taking money away from the taxpayer penalising the taxpayer and so on.

Mr. A. M. SAMUEL: I said the poor man.

Mr. SNOWDEN: The poor man. But it is only to-day that the hon. Member has discovered that this does penalise the poor man because he has hitherto been most prominent in supporting what will be the case if my Amendment is accepted. It took the hon. Member a long inquiry to discover what the effect would be. There is no penalising the poor man. He will get as much abatement upon his life assurance policy as he gets at the present time and if I were to concede what has been demanded this
evening the State would be making a gift to that man. [HON. MEMBERS: "No!"] Of course it would. I know the point which the hon. Members have in mind. It never occurred to them until the life assurance offices put it into their minds. Under my Amendment he will not pay a penny more than he has been paying in the past. There is no additional charge. Hon. Members have used the phrase "an additional charge"; there is no additional charge. Let me come to the point made by the hon. and gallant Member for Ripon on which I dare say we shall dwell a great deal more before this discussion ends. It is claimed that the owner of an insurance policy has an interest in the profits of the company—in the reserves of the company—and that when the company pays 4s. 6d. in the £ this man is taxed at 4s. 6d. in the £. As I understand the position that is put forward by the life insurance companies it is that he should be given more than he has ever been given before in order to compensate him for what is supposed to be his loss, because of the increased taxation of the companies' profits.

Major HILLS: Not more, but the same proportion.

Mr. SNOWDEN: What is to be the position? We have heard a great deal about the poor man to-night, and have been told that it is the poor man who ought to be encouraged to take out an insurance policy. But what will be the position, if I concede the point that has been put forward? It is only the small Income Tax payers who are insured who will benefit. But what about the millions of policy holders who do not pay Income Tax? Are they going to get anything They will get nothing at all, and the logical conclusion of the proposal, if carried into effect, would be that, although they do not pay Income Tax, they ought to make a claim upon the insurance company for the amount of Income Tax that they are supposed to suffer. I shall stand by the proposal of my Amendment. I am not going to agree to something which gives back to a policy holder more than he is actually paying. The discussion so far this evening upon this Clause has almost made one feel that the very generous concession I have made ought not to have been offered. An hon. Member behind me
says, "Why not withdraw the concession?" That is the alternative. I shall be perfectly willing to withdraw it. Having done so much more than was expected from me at the time when I offered to consider this matter, I ought to have been met in a more generous spirit. If, after having wrung from me this very costly concession, hon. Members are not satisfied and are not going to be satisfied with what I have given to them, then I go back to my original position.

Sir A. STEEL-MAITLAND: It is an extraordinary speech to which we have just listened. We all of us recognise the concession which the Chancellor of the Exchequer has made, and we have said that we appreciate it. That was made known before the discussion of this Clause began. There is no lack of appreciation, but we are putting before the House what we think should be considered in the public interest. The Chancellor of the Exchequer has referred to the Committee stage of the Bill. He said that the opinion was then universal that nobody who under Clause 9 was paying only at the rate of four-ninths, or 2s. in the ought to be allowed to get an Income Tax rebate at the rate of 2s. 3d. Of course, the fact is that these things are not related to one another. It is not the case that the man who is paying the 2s. pays that and no more.
During the Committee stage we were not all of us unanimous on this side. Personally I was definitely opposed to the point then made by my hon. Friend the Member for Farnham (Mr. A. M. Samuel). I had read the Royal Commission's report. The question of the investments made by the insurance companies was also involved. If there was any mistake made at that time it was a mistake made by the Chancellor of the Exchequer himself, for he related the 2s. on the taxable income not exceeding £250 that would be paid under Clause 9, to the 2s. 3d. under Clause 10. He will find what he said on the subject in the OFFICIAL REPORT, and I will read it to him if he wishes me to do so. To-day he has criticised the insurance companies for having been so active in their propaganda. The insurance companies have not been active in that sense. The fact is that some of us found this Clause extraordinarily difficult to understand. I do not know whether hon.
Members opposite have read it and tried to construe it. It was not until the Committee stage was well advanced that some of us came to the conclusion that we had been mistaken in our view, and we then asked the life assurance companies to send delegates to meet us. I say that in fairness to the companies. I am sure that when the Chancellor of the Exchequer thinks the matter over he will realise that the action of the companies generally on this Budget and on Clause 12 is not a subject for criticism, but that on the whole they have had a very considerable regard for public interest.
Let me put to the right hon. Gentleman again the real merits of this Clause. Although he cannot see his way to go as far as we think that he ought in fairness to go, and although we appreciate the concession that he has made, yet we think that the whole of the House, if it understood fully what some of us have taken great pains to understand, would agree with us. On the face of it it looks rather strange and illogical that a man with an income not exceeding £250 should be given a concession so that he pays Income Tax at the rate of 2s., and that afterwards, when it comes to the rebate on his insurance premium, we should ask for a rebate at the rate of 2s. 3d. On the face of it it looks wrong. It looks as if the man would get back more than he has paid. If that were so any talk about this Clause penalising policy holders would really be nonsense and insincere. Of course the facts are not so.
This is what was said before the Royal Commission. The small insurers just as well as the larger policy holders have a vested interest in the investments made by the insurance companies with which they insure. Those investments bear interest, and that interest, less expenses, pays Income Tax at the full standard rate, which at present is 4s. 6d. The smaller insurers, whose case we are arguing, since their own incomes are not large enough to render them liable to Income Tax at the full rate, are greatly overtaxed on their share of the interest on the investments of the insurance companies. In support of that view let me quote the opinion, not of anybody on this side, not of the insurance companies, but of the Assistant Chief Inspector of
Taxes, in his official evidence before the Royal Commission:
The simple fact is that the real difference between life policy and investment is that the interest is continually growing on the policy but is not paid to the man. In the other case, where he makes an investment, it is growing and it is paid to the man. It is credited to him in the case of the policy, but just because it is not taken out he misses his power to claim repayment of tax. I think the hardship should certainly be met. It is quite clear to me that policy holders as a class pay a great deal more tax than they ought to pay in that way.
10.0 p.m.
That was the evidence of Mr. Furtado, of the Board of Inland Revenue, to the Royal Commission. The remark that they pay more tax than they ought to pay really applies only to the poorer persons. The richer man would, of course, pay Income Tax whether on investments in the hands of an insurance company, or on his own capital, at the full rate of 4s. 6d. It is the poorer man, who owns a share of the investments held by the insurance company, and who is made to pay at 4s. 6d. because the company pays at the full rate, whereas, on his own income, he would only be liable to Income Tax at the rate of 2s., who is over-taxed. What is the degree of over-taxation? At the present time the standard rate of Income Tax is 4s. 6d. in the £. On the other hand, the rate which these poorer people themselves would have to pay on their own incomes is only 2s., and therefore the amount of over-taxation on their share of the investments held by the insurance company is the difference between 4s. 6d. and 2s. To do them justice therefore they ought to receive compensation at the rate of 2s. 6d. in the £. That is clear on the official evidence of the Inland Revenue before the Royal Commission. How, then, can this comsensation be arranged? It has been calculated—again by the Inland Revenue and not by us or by the insurance companies—that the amount of this sum which the insurance companies receive in interest is equal to about half the amount of the premiums that are paid. It is clear that if the interest is equal to half the premiums, then 2s. 6d. on the interest is equal to 1s. 3d. on the premiums. If you are going to compensate them for being overtaxed
to the extent of 2s. 6d. on the interest, you have to give them the equivalent of 1s. 3d. on the premium. I hope that is clear so far. It is a sum which everybody ought to understand.
Let me now come to another side of the question. The rebate generally given in these matters takes the form of giving people not merely compensation for overtaxation but an inducement to insure, and the main inducement given at the present time is half the rate of the Income Tax which they pay. In the case of the rich man the half of 4s. 6d. is 2s. 3d. and that is what he gets. In the case of the poor man who pays 2s., the half of the 2s. is of course 1s. Now 1s. is the inducement to insure and 1s. 3d. is the compensation for over-taxation and it, is by adding these two together that we get the 2s. 3d. for which we are asking. That claim is based solely on the arguments put forward to the Royal Commission by the Inland Revenue authorities themselves. That is why we think that, in justice, it ought to be conceded. We do not wish to ask for anything which we do not think absolutely just. I do not want to criticise paragraph (f, ii) of the Chancellor's Amendment, but if the right hon. Gentleman works it out in detail he will find that it does not achieve its object. A person with an income of over £278 who makes an insurance of over £30 pays Income Tax at the rate of 2s. 3d., but anyone with an income above that amount does not get his full share of rebate even on the right hon. Gentleman's own showing.
I do not wish to labour a minute and complicated point but, as the Chancellor of the Exchequer spoke rather vehemently just now I wish to put this to him. We realise the difficulty that he is in but we ask the House to recognise that this is really a question of principle, and it is a principle which is based not merely on unofficial or on commercial beliefs, but on the official evidence given at the Royal Commission and the conclusions based upon it by the Commission. The position of the Chancellor of the Exchequer is difficult and we realise the difficulty. We feel however that while this concession is costing him a good deal more than he calculates, a comparatively small additional amount would probably do justice all round and also conform to the spirit of the recommendations of the
Royal Commission on Income Tax. The Chancellor of the Exchequer has derided the possibility of this being detrimental, and discouraging insurance. When I saw some of the representatives of the insurance companies, I cross-questioned them about this matter very closely because, knowing the difficulties, I did not want to press on the right hon. Gentleman anything which I could not justify up to the hilt. There is a certain detriment in the amount itself but I am sure hon. Members opposite as well as hon. Members on this side feel that it is not so much the amount itself which is detrimental on the source of industry created. We thank the Chancellor for restoring what I call the fraction of the standard rate because that takes away one source of insecurity. But it also means this—that when you depart from the simple or recognised fraction which we had before you create a sense of insecurity on the other hand which is not easy to overcome.
Again, if you really want to encourage insurance, you must make a fairly simple and intelligible proposition to the ordinary person who wants to insure. It is no good going into elaborate calculations with him. This very complicated concession which the Chancellor of the Exchequer has given has this drawback, that if you want a poor person to insure you have to say to him, "What is your taxable income?" The man will not know what his taxable income is, and, even if he can find out what his taxable income is for that year, probably the next year or the year after he will get a rise in wages and his taxable income will not be the same. When the Royal Commission on Income Tax made the proposal which has been referred to Income Tax was 6s. in the £. When you consider the difference in the new rate of taxation on the investments in the hands of the insurance companies, we believe that what we are proposing would make the concession, instead of being a costly one which will still leave a sense of soreness, one which would not be much more costly, which would leave the position simple and which would do justice to those concerned.

Mr. P. SNOWDEN: The right lion Gentleman who has just spoken made great play with the evidence which was given by an official of the Inland Revenue
before the Royal Commission. Is he aware—I am quite sure he cannot be aware or he would not have used that evidence in the way he has done—that the evidence was given in support of a scheme of rebate on life insurance premiums much less generous than that which is in operation to-day?

Sir A. STEEL-MAITLAND: I was not aware of that; but the facts as stated are independent of any particular scheme. The conclusions that I have stated are the conclusions of the Royal Commission, from which the Chancellor himself departs.

Captain CAZALET: The Chancellor of the Exchequer has come before the House in quite a new role. He has appealed for our support on the ground that he has been bullied, battered and browbeaten by the Opposition after making a certain concessionn. I am quite certain that those of us who know him will not allow this appeal to our sympathy on this ground to deflect us or prevent us from stating the case, that we believe to be a just case, on the part of the small taxpayer. He taunted us also by saying that it was only within the last few days that we had discovered this particular point. When you have such a Sub-section as paragraph (f, ii) of Clause 10 put before you as part of the Finance Bill, is it really any wonder that the full significance of it should not be realised immediately? Should it be accounted unto us for shame, after we have been informed by those who understand the Clause of its full import, that we should rise in our places and try to explain this point and make an appeal to the Chancellor of the Exchequer? The whole import of this Clause is that relief at half the standard rate is given on life insurance premiums for every person who has an income above the figure of £250 a year.
When this was debated on the 23rd of June, it was said that there should be some relation between the standard rate of Income Tax and the relief which was given on life insurance policies. Why is it that this relief is not to be given to this particular type of taxpayer? It was said that if it is to be given at 2s. 3d. in the £ they would be receiving back something from the Exchequer. That was shown later to be an impossibility.
Secondly, it was held that, under Clause 9 of the Finance Bill, a certain concession had been given. Everybody has acknowledged that concesison to the small Income Tax payer, but surely this Clause is taking away with one hand what the Chancellor of the Exchequer has prided himself upon giving with the other. The effect of this will be that he is giving greater concessions to the improvident than to the provident person. The effect of the Chancellor of the Exchequer's proposal to grant relief at 2s. only is largely to nullify the intended relief in the case of the provident man. In the following examples which I shall give it has been assumed that 10 per cent. of the income is spent on life insurance.
Take the case of a man with an earned income of £400 a year. The relief to the provident man who has insured his life is 2s., whereas the relief to the improvident man is 12s. In the case of a man with an income of £500 a year, the provident man will receive relief to the extent of £1 6s. while the improvident man will receive £1 13s. In every case the relief is greatest to the improvident man, whereas you would expect that the greater relief would be given to the provident man. If we take the case of a man who, instead of investing £50 in life insurance premiums, invests £50 in Consols, he gets relief at the rate of 2s. 6d. in the £ on the interest on that money. We claim that the relief should be given at the same rate to the man who has invested in insurance. We get the figure in this Clause of four-ninths of the standard rate. It happens this year to work out at four-ninths of 4s. 6d.; but I think it would tax the ingenuity of the Chancellor of the Exchequer to work out what four-ninths would be in the regrettable event of the rate of Income Tax rising to 5s. next year. What would be four-ninths of 5s.?
Imagine the position of the agent going round and trying to explain exactly how much under this Clause the relief will be. He will have to deal either in packets of pins or use decimal points to many places. Enough has been said on these benches to show, and evidence has been given from a variety of sources to indicate—although the Chancellor rather brushes it aside—that this Clause will create an
attitude of uncertainty among a large section of the community. May I ask the Chancellor if I understand paragraph (f, ii) correctly. I take the following example. Take the taxable income of an individual at £275. The premium he pays is £50; the taxable income of £275 exceeds £250 by £25. Therefore he will get relief of 2s. 3d. on one £25, and 2s. on the other £25. I think that that is a correct interpretation of this paragraph. If it is, I would ask the Financial Secretary if it is not possible to express it in slightly simpler language.

Sir B. PETO: Is it worth while to pass this Clause as amended and put it on the Statute Book, considering the terrible complications and all the objections which have been raised in the House to-night? The Chancellor said that we were asking for some special concession for a particular section of the taxpayers. We are doing nothing of the kind. We are asking the Chancellor to leave the status quo, to leave these taxpayers like the rest of the taxpayers in receipt of the particular rebate which was settled in 1921, when all this question was gone into. The Chancellor's proposal will be a blow to the extension of insurance. I will tell him why. The poor man with an income which comes within the statutory relief asks the insurance man, "What am I going to get out of this?" That is a simple way of looking at it. The insurance man will say, "You will get relief on your premium at half the standard rate of Income Tax. If Income Tax goes up to 5s. or 5s. 6d. or 6s. in the £, or if it goes down, you will always get, relief at half the standard rate of Income Tax."
That is a thing anybody can understand, but what does the Chancellor propose that the insurance agent shall say in future? He will have to point to these words in an Act of Parliament, and he will have to ask, "What is your income this year?" The man will say, "I do not quite know, because my salary has not been settled." When it is finally settled, the question arises," What is you income next year going to be?" and an entirely different calculation will have to be made next year. Then the question will arise further as to what the Income Tax is going to be, because the relief is going to be limited to four-ninths. Four-ninths of 4s. 6d. is a perfectly easy sum, and I
suppose that the Chancellor having become hypnotized by the fact that he has raised the Income Tax to 4s. 8d., fixed this fraction. Four-ninths of 4s. 6d. is an easy sum to work out, but the probability is that next year the Income Tax will be at least 5s. in the £, and, if the Chancellor is in his present position for another year, it will probably be 5s. 6d., or some odd figure like 5s. 9d. While four-ninths of 4s. 6d. is an easy sum, I ask the Chancellor of the Exchequer to work out, four-ninths of 5s. or 60 pence. That is not an easy sum. Nor is four-ninths of 5s. 6d., which is 66 pence, nor four-ninths of 5s. 9d., which is 69 pence, an easy sum to do. We ought to make things easy from the point of view of inducing a man to ensure.
I come back to my question, Is this change worth while? The Chancellor of the Exchequer complains that we are like Oliver Twist, asking for more, when he has already given so much. If he has given so much, there is very little left to give. He told us it was a matter of only a few pence in each individual case. A few pence may be a considerable sum to someone who has an income of barely £250 per year and a good deal of responsibilities, but they are a very little sum to the Chancellor of the Exchequer, and the smaller the sum the more the Chancellor of the Exchequer should feel inclined to give way. I do not understand his position in thinking it is worth while to have in the Bill this Clause 10, elaborated by the insertion of the words on the Order Paper. It, has taken some of us a good deal of anxious thought to find out how these words will work out in individual cases, and why should he substitute them for the procedure which was adopted, after hearing elaborate evidence, as being the simplest way of putting small taxpayers in the same position as the larger taxpayers—having always in mind the fact that the income of the insurance company is taxed at the full rate of Income Tax?
What is the object of this change. Simply that the Chancellor has got it into his head that somehow or other a man who has given 2s. will be entitled to ask him for 2s. 3d. We have absolutely exploded that idea. Nobody will get out of the Treasury 2s. 3d. when he has only put in 2s.; because he cannot get out anything which he has not put in, as is clear under the Act of 1920. We
have met and refuted every argument which the Chancellor has put forward, and we say simply that in the interests of simplicity, of justice and of continuity it is unwise to interfere with a well-established practice, particularly one that concerns a matter of insurance, and to create a position in which no man will know what alterations are to be made from year to year. This has been the accepted practice for 10 years, and countless thousands of insurance policies have been taken out in that time, and hitherto everybody has believed that the practice would be maintained no matter what Government were in power. It is a curious thing that when a Socialist Government come into power the people with the smallest incomes are to find that what has been good for 10 years under Conservative Governments is now to be abolished, and that they will not know what allowance is to be made on their small insurance premiums.
I ask the Chancellor of the Exchequer to leave the matter where it is. That is all we are asking. The law has worked well for 10 years and we ought not to be messed about by being given a new Clause which it takes a Member of this House days to understand. The Chancellor of the Exchequer has told us that we did not fully expose the case during the Committee stage. What is the value of the Report stage of a Finance Bill in this House if we are not to have the opportunity of getting all the information we can, and putting the arguments on the Report stage which we could not put on the Committee stage? The Chancellor of the Exchequer is absolutely deaf to every argument that is put forward and he only taunts us with not having known all about it. When we bring fresh arguments to bear and we are told that that is a fault on the part of the Opposition we have come to a very strange pass in the procedure of this House. I ask the Chancellor of the Exchequer even at the Eleventh hour not to stand firm on this question in his determination to make no concession to argument which he has not made to force.

Mr. ERNEST BROWN: I took part in the original debate, and I do not agree that the Chancellor of the Exchequer has been deaf on this point because he has met us very generously in this matter. I wish he could go a little further than he has done from the point of view of
the Treasury itself. I think this debate has shown every Member of the House who has listened to it with any acuteness that there must be vast administrative difficulties, because every single case must come up. As I read the new Clause every single new case must come up for consideration. A case may be the subject of correspondence, dispute, and investigation, and it is quite possible that in asserting what may be a very clever Treasury point discovered by one of our able Treasury officials the Treasury itself may actually expend, in the course of any given financial year more, in trying to get all the innumerable cases settled that will have to be settled more than the money involved in each single year. I hope before the Financial Secretary replies to this debate, if he is going to reply, that he will think this point over, because I am sure that in getting this complicated matter settled, the Treasury and the insurance offices are letting themselves in for a vast amount of detailed labour and investigation which have no relation to the financial results.

Mr. SMITHERS: May I make a final appeal to the Chancellor of the Exchequer to reconsider this question. If ever arguments were sincerely put forward to this House they have been put forward sincerely on this occasion. I happen to have a great and intimate friend high up in the insurance world, and he assures

me that the passing of the Chancellor of the Exchequer's Amendment, which is really a new Clause, will indeed make it very difficult to work the insurance business and will be harmful to their efforts to get people to insure and will do harm throughout the country. May I ask the Chancellor of the Exchequer this question: What is the difference in the cost to the Exchequer between the Clause as he wishes to have it, presuming his Amendment to be carried, and the full concession to delete the whole Clause? If he would give me an answer to this question, I should be very grateful.

Mr. P. SNOWDEN: If the hon. Member had been in the House half an hour ago, there would have been no need for him to ask that question. I gave the figure. The cost of my Amendment will be £400,000 a year, and the full cost would be £500,000.

Mr. SMITHERS: Then the difference between the Chancellor of the Exchequer's Clause as he wants it and the deletion of the whole Clause is £100,000, and he is holding up the whole of the insurance business for the sake of £100,000.

Question put, "That the words proposed to be left out, to the end of line 15, stand part of the Bill."

The House divided: Ayes, 224; Noes, 163.

Division No. 441.]
AYES.
[10.33 p.m.


Adamson, Rt. Hon. W. (Fife, West)
Cameron, A. G.
Graham, D. M. (Lanark, Hamilton)


Adamson, W. M. (Staff., Cannock)
Cape, Thomas
Graham, Rt. Hon. Wm. (Edin., Cent.)


Addison, Rt. Hon. Dr. Christopher
Carter, W. (St. Pancras, S. W.)
Grenfell, D. R. (Glamorgan)


Aitchison, Rt. Hon. Craigie M.
Charleton, H. C.
Griffiths, T. (Monmouth, Pontypool)


Alexander, Rt. Hon. A. V. (Hillsbro')
Chater, Daniel
Groves, Thomas E.


Alpass, J. H.
Clarke, J. S.
Grundy, Thomas W.


Ammon, Charles George
Cluse, W. S.
Hall, G. H. (Merthyr Tydvil)


Arnott, John
Clynes, Rt. Hon. John R.
Hall, Capt. W. G. (Portsmouth, C.)


Attlee, Clement Richard
Cocks, Frederick Seymour
Hamilton, Mary Agnes (Blackburn)


Ayles, Walter
Compton, Joseph
Hardie, George D.


Baker, John (Wolverhampton, Bilston)
Cove, William G.
Hastings, Dr. Somerville


Baldwin, Oliver (Dudley)
Daggar, George
Haycock, A. W.


Barnes, Alfred John
Dallas, George
Hayday, Arthur


Batey, Joseph
Dalton, Hugh
Hayes, John Henry


Bellamy, Albert
Davies, Rhys John (Westhoughton)
Henderson, Arthur, Junr. (Cardiff, S.)


Bennett, Capt. Sir E. N. (Cardiff C.)
Denman, Hon. R. D.
Henderson, W. W. (Middx., Enfield)


Bentham, Dr. Ethel
Dukes, C.
Herriotts, J.


Bowen, J. W.
Duncan, Charles
Hirst, G. H. (York W. R. Wentworth)


Bowerman, Rt. Hon. Charles W.
Ede, James Chuter
Hirst, W. (Bradford, South)


Broad, Francis Alfred
Edmunds, J. E.
Hoffman, P. C.


Bromfield, William
Edwards, E. (Morpeth)
Hopkin, Daniel


Bromley, J.
Egan, W. H.
Horrabin, J. F.


Brooke, W.
Forgan, Dr. Robert
Hudson, James H. (Huddersfield)


Brothers, M.
Freeman, Peter
Isaacs, George


Brown, C. W. E. (Notts, Mansfield)
Gardner, B. W. (West Ham, Upton)
John, William (Rhondda, West)


Brown, Rt. Hon. J. (South Ayrshire)
Gardner, J. P. (Hammersmith, N.)
Johnston, Thomas


Brown, W. J. (Wolverhampton, West)
Gibbins, Joseph
Jones, Morgan (Caerphilly)


Buchanan, G.
Gibson, H. M. (Lancs, Mossley)
Jowett, Rt. Hon. F. W.


Burgess, F. G.
Gill, T. H.
Jowitt, Sir W. A. (Preston).


Buxton, C. R. (Yorks. W. H. Elland)
Gossling, A. G.
Kelly, W. T.


Calne, Derwent Hall-
Gould, F.
Kennedy, Thomas


Knight, Holford
Noel Baker, P. J.
Snowden, Thomas (Accrington)


Lang, Gordon
Noel Buxton, Baroness (Norfolk, N.)
Stamford, Thomas W.


Lansbury, Rt. Hon. George
Oldfield, J. R.
Stephen, Campbell


Law, Albert (Bolton)
Oliver, George Harold (Ilkeston)
Stewart, J. (St. Rollox)


Law, A. (Rosendale)
Palin, John Henry
Strachey, E. J. St. Loe


Lawrence, Susan
Palmer, E. T.
Strauss, G. R.


Lawrie, Hugh Hartley (Stalybridge)
Parkinson, John Allen (Wigan)
Sullivan, J.


Lee, Frank (Derby, N. E.)
Perry, S. F.
Sutton, J. E.


Lee, Jennie (Lanark, Northern)
Pethick-Lawrence, F. W.
Taylor, R. A. (Lincoln)


Lewis, T. (Southampton)
Phillips, Dr. Marion
Taylor, W. B. (Norfolk, S. W.)


Lindley, Fred W.
Potts, John S.
Thomas, Rt. Hon. J. H. (Derby)


Lloyd, C. Ellis
Price, M. P.
Thorne, W. (West Ham, Plaistow)


Logan, David Gilbert
Quibell, D. J. K.
Tillett, Ben


Longbottom, A. W.
Raynes, W. R.
Tinker, John Joseph


Longden, F.
Richards, R.
Toole, Joseph


Lovat-Fraser, J. A.
Richardson, R. (Houghton-le-Spring)
Tout, W. J.


Lowth, Thomas
Riley, F. F. (Stockton-on-Tees)
Townend, A. E.


Lunn, William
Ritson, J.
Trevelyan, Rt. Hon. Sir Charles


Macdonald, Gordon (Ince)
Roberts, Rt. Hon. F. O. (W. Bromwich)
Viant, S. P.


MacDonald, Malcolm (Bassetlaw)
Romeril, H. G.
Walkden, A. G.


McElwee, A.
Rosbotham, D. S. T.
Walker, J.


McEntee, V. L.
Rowson, Guy
Wallace, H. W.


MacLaren, Andrew
Salter, Dr. Alfred
Wallhead, Richard C.


McShane, John James
Samuel, H. Walter (Swansea, West)
Watkins, F. C.


Mansfield, W.
Sanders, W. S.
Watson, W. M. (Dunfermline)


March, S.
Sandham, E.
Watts-Morgan, Lt.-Col. D. (Rhondda)


Marcus, M.
Sawyer, G. F.
Wellock, Wilfred


Markham, S. F.
Scurr, John
Welsh, James (Paisley)


Marley, J.
Sexton, James
West, F. R.


Marshall, Fred
Shepherd, Arthur Lewis
Westwood, Joseph


Mathers, George
Sherwood, G. H.
Whiteley, Wilfrid (Birm., Ladywood)


Matters, L. W.
Shield, George William
Whiteley, William (Blaydon)


Maxton, James
Shiels, Dr. Drummond
Williams, David (Swansea, East)


Messer, Fred
Shillaker, J. F.
Williams, Dr. J. H. (Llanelly)


Middleton, G.
Shinwell, E.
Williams, T. (York, Don Valley)


Mills, J. E.
Short, Alfred (Wednesbury)
Wilson, C. H. (Sheffield, Attercliffe)


Milner, Major J.
Simmons, C. J.
Wilson, J. (Oldham)


Montague, Frederick
Sinkinson, George
Wilson, R. J. (Jarrow)


Morgan, Dr. H. B.
Sitch, Charles H.
Winterton, G. E. (Leicester, Loughb'gh)


Morley, Ralph
Smith, Ben (Bermondsey, Rotherhithe)
Wise, E. F.


Morrison, Robert C. (Tottenham, N.)
Smith, Frank (Nuneaton)
Young, R. S. (Islington, North)


Mort, D. L.
Smith, Rennie (Penistone)



Mosley, Sir Oswald (Smethwick)
Smith, Tom (Pontefract)
TELLERS FOR THE AYES.—


Murnin, Hugh
Smith, W. R. (Norwich)
Mr. Charles Edwards and Mr.


Naylor, T. E.
Snowden, Rt. Hon. Philip
Paling.


NOES.


Acland-Troyte, Lieut.-Colonel
Crookshank, Capt. H. C.
Hanbury, C.


Ainsworth, Lieut.-Col. Charles
Culverwell, C. T. (Bristol, West)
Hartington, Marquess of


Albery, Irving James
Dalrymple-White, Lt.-Col. Sir Godfrey
Harvey, Major S. E. (Devon, Totnes)


Allen, Lt.-Col. Sir William (Armagh)
Davies, Dr. Vernon
Henderson, Capt. R. R. (Oxf'd, Henley)


Allen, W. E. D. (Belfast, W.)
Davies, Maj. Geo. F. (Somerset, Yeovil)
Heneage, Lieut.-Colonel Arthur P.


Amery, Rt. Hon. Leopold C. M. S.
Davison, Sir W. H. (Kensington, S.)
Hennessy, Major Sir G. R. J.


Aske, Sir Robert
Dawson, Sir Philip
Herbert, Sir Dennis (Hertford)


Atkinson, C.
Dixey, A. C.
Hills, Major Rt. Hon. John Waller


Balfour, George (Hampstead)
Duckworth, G. A. V.
Horne, Rt. Hon. Sir Robert S.


Balfour, Captain H. H. (I. of Thanet)
Dugdale, Capt. T. L.
Hunter, Dr. Joseph


Balniel, Lord
Dudgeon, Major C. R.
Hurd, Percy A.


Bevan, S. J. (Holborn)
Eden, Captain Anthony
Iveagh, Countess of


Birchall, Major Sir John Dearman
Edmondson, Major A. J.
Jones, Sir G. W. H. (Stoke New'gton)


Bird, Ernest Roy
Elliot, Major Walter E.
Kedward, R. M. (Kent, Ashford)


Bourne, Captain Robert Croft
Erskine, Lord (Somerset, Weston-s. M.)
Kindersley, Major G. M.


Bowyer, Captain Sir George E. W.
Everard, W. Lindsay
King, Commodore Rt. Hon. Henry D.


Bracken, B.
Falle, Sir Bertram G.
Knox, Sir Alfred


Brass, Captain Sir William
Ferguson, Sir John
Lamb, Sir J. Q.


Briscoe, Richard George
Ford Sir P. J.
Lane Fox, Col. Rt. Hon. George R.


Brown, Col. D. C. (N'th'l'd., Hexham)
Fremantle, Lieut.-Colonel Francis E.
Leighton, Major B. E. P.


Brown, Ernest (Leith)
Ganzoni, Sir John
Lewis, Oswald (Colchester)


Brown, Brig.-Gen. H. C. (Berks, Newb'y)
George, Major G. Lloyd (Pembroke)
Llewellin, Major J. J.


Buckingham, Sir H.
Gibson, C. G. (Pudsey & Otley)
Long, Major Eric


Butler, R. A.
Glassey, A. E.
Lymington, Viscount


Butt, Sir Alfred
Graham, Fergus (Cumberland, N.)
McConnell, Sir Joseph


Cadogan, Major Hon. Edward
Grattan-Doyle, Sir N.
MacRobert, Rt. Hon. Alexander M.


Cautley, Sir Henry S.
Gray, Milner
Maitland, A. (Kent, Faversham)


Cayzer, Maj. Sir Herbt. R. (Prtsmth, S.)
Greene, W. P. Crawford
Makins, Brigadler-General E.


Cazalet, Captain Victor A.
Grenfell, Edward C. (City of London)
Margesson, Captain H. D.


Christie, J. A.
Gretton, Colonel Rt. Hon. John
Marjoribanks, E. C.


Colman, N. C. D.
Griffith, F. Kingsley (Middlesbro' W.)
Mason, Colonel Glyn K.


Colville, Major D. J.
Guinness, Rt. Hon. Walter E.
Meller, R. J.


Courtauld, Major J. S.
Gunston, Captain D. W.
Merriman, Sir F. Boyd


Courthope, Colonel Sir G. L.
Hacking, Rt. Hon. Douglas H.
Mitchell-Thomson, Rt. Hon. Sir W.


Cowan, D. M.
Hall, Lieut.-Col. Sir F. (Dulwich)
Mond, Hon. Henry


Cranborne, Viscount
Hammersley, S. S.
Monsell, Eyres, Com. Rt. Hon. Sir B.




Moore, Lieut. Colonel T. C. R. (Ayr)
Salmon, Major I.
Titchffield, Major the Marquess of


Morden, Col. W. Grant
Samuel, A. M. (Surrey, Farnham)
Todd, Capt. A. J.


Morris, Rhys Hopkins
Samuel, Samuel (W'dsworth, Putney)
Train, J.


Morrison, W. S. (Glos., Cirencester)
Sandeman, Sir N. Stewart
Tryon, Rt. Hon. George Clement


Morrison-Bell, Sir Arthur Clive
Savery, S. S.
Vaughan-Morgan, Sir Kenyon


Muirhead, A. J.
Shepperson, Sir Ernest Whittome
Ward, Lieut.-Col. Sir A. Lambert


Nicholson, O. (Westminster)
Simon, E. D. (Manch'ter, Withington)
Waterhouse, Captain Charles


Oliver, P. M. (Man., Blackley)
Sinclair, Sir A. (Caithness)
Wayland, Sir William A.


Oman, Sir Charles William C.
Smith-Carington, Neville W.
Wells, Sydney R.


Owen, Major G. (Carnarvon)
Smithers, Waldron
Williams, Charles (Devon, Torquay)


Peto, Sir Basil E. (Devon, Barnstaple)
Somerville, A. A. (Windsor)
Wilson, G. H. A. (Cambridge U.)


Pybus, Percy John
Somerville, D. G. (Willesden, East)
Windsor-Clive, Lieut.-Colonel George


Ramsay, T. B. Wilson
Southby, Commander A. R. J.
Womersley, W. J.


Ramsbotham, H.
Spender-Clay, Colonel H.
Wood, Major McKenzie (Banff)


Reid, David D. (County Down)
Stanley, Lord (Fylde)
Young, Rt. Hon. Sir Hilton


Remer, John R.
Stanley, Maj. Hon. O. (W'morland)



Reynolds, Col. Sir James
Steel-Maitland, Rt. Hon. Sir Arthur
TELLERS FOR THE NOES.—


Ross, Major Ronald D.
Thomas, Major L. B. (King's Norton)
Sir George Penny and Captain


Ruggles-Brise, Lieut.-Colonel E. A.
Thomson, Sir F.
Wallace.


Russell, Alexander Weil (Tynemouth)
Tinne, J. A.



Question put, and agreed to.

Mr. P. SNOWDEN: I beg to move, in page 7, line 15, to leave out from the word "if" to the end of the Clause, and to insert instead thereof the words:
at the end of sub-section (3) there were inserted the following new paragraph:
(f) shall, as regards premiums or sums in respect of which the claimant would but for this restriction he entitled to an allowance at half the standard rate of tax, be given at a rate of tax greater than four-ninths of the standard rate—

(i) where the taxable income of the claimant does not exceed two hundred and fifty pounds; or
(ii) where the taxable income of the claimant exceeds two hundred and fifty pounds in respect of the amount, if any, by which the premiums or sums exceed the amount by which the taxable income exceeds two hundred and fifty pounds;

In this paragraph the expression 'taxable income,' in relation to any person, means the total income of that person, estimated in accordance with the provisions of the Income Tax Acts as they apply to income tax chargeable at the standard rate less any amount on which he is, by virtue of sub-section (1) of section forty of the Finance Act, 1927, entitled to relief by way of a deduction of tax.

Sir A. STEEL-MAITLAND: There is in my name and the names of some of my hon. Friends an Amendment on the Order Paper to the proposed Amendment of the right hon. Gentleman to leave out paragraph (ii). I do not propose to continue the debate on this Clause. I am not certain whether the Chancellor of the Exchequer is prepared to accept my Amendment or not.

Mr. P. SNOWDEN: indicated dissent.

Sir A. STEEL-MAITLAND: If the right hon. Gentleman thinks that he cannot accept the Amendment, we do not wish to go to a Division. I would only
say that the Amendment moved by the Chancellor of the Exchequer will not achieve the object of the right hon. Gentleman. He will find that if he includes an income above a total of £278 a year it will not achieve his object.

Amendment agreed to.

CLAUSE 11.—(Deduction of tax.)

Mr. P. SNOWDEN: I beg to move, in page 8, line 21, to leave out the second word "on," and to insert instead thereof the word "of."
This is one of the Amendments which the learned Attorney-General in the Committee stage said he would look into to see whether the wording could be made a little more clear, and this is the result.

Captain BOURNE: The Chancellor of the Exchequer has said, in effect, that this Amendment is purely a drafting Amendment. I have looked at the Amendment very carefully, and I find it very difficult to see how it goes into the Clause. If hon. Members will trouble to look at the Blue Paper of yesterday, they will find that this Amendment was put down to line 32, in which the word "on" does not occur, The Amendment is now put down to line 21, and the special paragraph would read, if the Amendment were made:
in the case of an over-deduction which is made good under paragraph (b) of this subsection, enure to the benefit of the person entitled to the payment on the occasion of which the over-deduction is made good;
I am doubtful whether the Amendment is really necessary. I would not have raised the point at the moment except that this being a Finance Bill it is extraordinarily difficult to amend it in another place. We ought to take every
care in this House to see that an Amendment inserted with the object of improving the Bill does not make nonsense, and so place the House in a difficulty in correcting the error in another place. I should be grateful if the learned Attorney-General would explain whether the substitution of the word "of" for the word "on" does, in fact, improve this particular Clause?

Mr. PETHICK-LAWRENCE: I confess that on first reading this Amendment it seemed a very peculiar one, but that is because we are still obsessed with the wording in the Clause. I hope that hon. Members will be able to make it read if they put a comma after the word "over-deduction." Perhaps the Committee will understand it better if I read the paragraph as amended:
any amount made good under the said Section two shall—
(i) in the case of an over-deduction, which is made good under paragraph (b) of this sub-section, enure to the benefit of the person entitled to the payment on the occasion of which the over-deduction is made good;

Amendment agreed to.

Mr. PETHICK-LAWRENCE: I beg to move, in page 8, line 27, to leave out from the beginning to the word "entitled," in line 28, and to insert instead thereof the words:
irrespective, in either case, of whether or not he is the person who was.
I think the meaning of the Clause has been clear from the beginning, namely, that the repayment would be to the person then holding the share and receiving the dividend, and not to the person who had had it in the first case. As it appeared in the original drafting, the point was raised in Committee that even if the same person held the share all the time, it was stated in one place that he would get it and in another place that he was not to get it. There was confusion. This Amendment has been put on the Order Paper in order to make it perfectly clear that where the same person holds the share the whole time he is to be the one person who gets the benefit.

Amendment agreed to.

CLAUSE 13.—(Amendment of s. 34 of Finance Act, 1926.)

Sir H. BUCKINGHAM: I beg to move, in page 12, line 39, after the word "months." to insert the words:
ending on a date within the year preceding the year of assessment.
These words have the effect of limiting the period at which the Inland Revenue authorities can fix the accounting date under this Clause. As I understand that the Amendment is to be accepted, I formally move it.

Lieut.-Colonel Sir G. DALRYMPLE-WHITE: I beg to second the Amendment.

Amendment agreed to.

CLAUSE 14.—(Provision as to computation of profits and gains for purpose of charge to tax in two years next after the year in which trade, etc., set up or commenced.)

Captain BOURNE: I beg to move, in page 13, line 10, at the end, to insert the words:
and the expression 'person charged' means a person who is a partner in a firm charged.
This Clause is a rather complicated one. It deals with Income Tax assessed upon profits, and the object is to make it perfectly clear that when the original charge is made upon a firm, in the case of a partner who resigns during one of the three years of assessment, he is not to be held liable because his partners subsequently, after he has retired from the firm and has no longer any interest or voice in its management, elect to alter the basis of assessment which they are entitled to have under the Clause. The whole object is to protect an individual who has ceased to have any voice in the management, and who, therefore, might find himself in a worse position should his partner, after retirement, decide to go back to another form of assessment.

Mr. A. M. SAMUEL: I beg to second the Amendment.

Mr. P. SNOWDEN: This Clause gives relief to new businesses in the second and third year of assessment. As the hon. and gallant Member who moved the Amendment has said, it is a very complicated matter, and one which needs some explanation. I think these who
have put down the Amendment have not apprehended what would be the effect of it in the wording in which it appears on the Order Paper. It clearly cannot be the intention of the mover of the Amendment to confine the benefits of the Clause to partnerships, and that, I am advised, would be the effect of the Amendment as it stands. I rather gathered from what the hon. and gallant Gentleman said that that was not the intention, but that it was intended to protect the individual who was in a partnership against any dispute he might have, or any action detrimental to himself that might be taken by his partner in the business. Another effect of the Amendment would be that a partner who claimed under this Amendment would be placed in a different position from the other partners in the firms and, therefore, by guarding against the danger the hon. and gallant Member is anxious to guard against, it would create a similar injustice against the other partners. I think it would be very much better to leave the position as it is now, because if the Amendment were accepted it would only add confusion.

Sir A. STEEL-MAITLAND: The Chancellor of the Exchequer, on the Committee stage said, if I remember rightly, that he would look into this and see whether it could be made clearer on the Report stage. I do not know whether he has done so or what the result is.

Mr. SNOWDEN: That is quite true, but I do not think I said it because, if I remember rightly, the Attorney-General was in charge of the Clause. He did give an undertaking that he would look into certain points which had been raised, and the Committee will find the results of his investigations in the numerous Amendments on the Order Paper. The Attorney-General has endeavoured in these Amendments to meet the points that were raised in the course of the Committee stage.

Captain BOURNE: In view of what the Chancellor has said, I beg to ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Mr. P. SNOWDEN: I beg to move, in page 13, line 11, to leave out the words "for the second year of assessment," and
to insert instead thereof the words, "or liable to be charged."

Captain BOURNE: I realise that the Chancellor has gone a very long way towards meeting some of the points raised in the Committee stage. Perhaps he will explain just how far this Amendment meets the particular point raised in my Amendment. As far as I can make out it does give some protection in cases where the partnership has elected to be charged under the provisions of this Clause. One of the partners dies, and subsequently the remaining partners give notice that they do not desire to remain under the assessment. I think it protects the individual who is no longer in a position to speak for the firm, and as far as I can make out he has only to signature his desire in writing. I shall be grateful if the Parliamentary Secretary will give us a slightly fuller explanation.

Mr. PETHICK-LAWRENCE: The effect is this. Under the Clause as it stood there was a danger that a different set of persons might come in and the option could be used to the disadvantage of the men who had gone out in favour of the men who had come in. The effect of the Amendment is that all the parties concerned must agree to the change in order to make it valid. In this way the second year partner is protected as against the third year partner.

Amendment agreed to.

Further Amendments made: In page 13, line 13, leave out the words "twelve months," and insert instead thereof the words "two years."

In line 14, after the word "year" insert the words "of assessment."

In line 19, leave out from the word "that" to the word "may," in line 20, and insert instead thereof the word "he."

In line 22, leave out the words "that year," and insert instead thereof the words "the third year of assessment."

In line 23, leave out the words "given by the person charged for the second year."

In line 27, leave out Sub-section (3), and insert instead thereof the words:
(3) If at any time during the second or third year of assessment, any such change as is mentioned in paragraph (1) of
Rule 11 of the Rules applicable to Cases I and II of Schedule D occurs in the persons engaged in the trade, profession, or vocation, a notice for the purposes of the last preceding sub-section or of the proviso thereto, must, if given after the occurrence of the change,—

(a) in the case of a notice given within twelve months after the end of the second year of assessment, be signed by each of the persons who were engaged in the trade, profession, or vocation, at any time between the commencement of the second year of assessment and the giving of the notice, or, in the case of a deceased person, by his legal representatives; and
(b) in the case of a notice given after the end of the third year of assessment, be signed by each of the persons who were engaged in the trade, profession, of vocation, at any time during the second or third year of assessment, or, in the case of a deceased person, by his legal representatives."—[Mr. P. Snowden.]

CLAUSE 16.—(Provision as to relief from double taxation on certain profits from sale of goods.)

Mr. P. SNOWDEN: I beg to move, in page 14, line 24, to leave out the words "from the sale of goods."

Sir D. HERBERT: We do not want to get a bad reputation with the right hon. Gentleman. May I be allowed, therefore, to say I am glad that on this occasion he has accepted the representations made through certain members of the London Chamber of Commerce?

Amendment agreed to.

Further Amendment made: In page 15, leave out the words from the word "indirectly," in line 17, to the word "through" in line 19.—[Mr. P. Snowden.]

CLAUSE 21.—(Power of special commissioners to obtain copies of registers of securities.)

Amendment made: In page 19, line 8, leave out the words "fifty pounds," and insert instead thereof the words "the like amount.—[Mr. P. Snowden.]

Mr. P. SNOWDEN: I beg to move, "That further Consideration of the Bill, as amended, be now adjourned."

I am very grateful to the House for the considerable progress that has been made.

Ordered, "That further Consideration of the Bill, as amended, be now adjourned."

Bill, as amended, to be further considered To-morrow.

Orders of the Day — NAVY AND MARINES (WILLS) BILL.

Order [10th April] for the committal of the Bill to a Standing Committee read and discharged.

Bill committed to a Committee of the Whole House for To-morrow.—[Mr. T. Kennedy.]

Orders of the Day — NAVY, ARMY AND AIR EXPENDITURE, 1928.

Resolved,
That this House will, upon Monday next, resolve itself into a Committee to consider the surpluses and deficits upon Navy, Army and Air grants for the year ended 31st March, 1929, and the application of surpluses to meet expenditure not provided for in the grants for that year."—[Mr. T. Kennedy.]

Ordered,
That the Appropriation Account for the Navy, which was presented upon 4th February last, and those for the Army and Air Departments which were presented upon the 10th February last, be referred to the Committee."—[Mr. T. Kennedy.]

The remaining Orders were read, and postponed.

Orders of the Day — ADJOURNMENT.

Resolved, "That this House do now adjourn."—[Mr. T. Kennedy.]

Adjourned accordingly at Two Minutes after Eleven o'Clock.